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#1 04-06-2015 11:25:35

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From: Paris - France
Registered: 21-12-2009
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EUR/USD: Merrill Lynch still expects parity, but road to it volatile

EUR/USD: Merrill Lynch still expects parity, but warns that road to it may be volatile

Despite the euro's increase yesterday, Merrill Lynch continues to expect a gradual decline of the EUR/USD to parity by the end of the year.

"Divergence in terms of monetary policy, with the ECB's continued QE and the Fed's expected rate hike in September should help the euro weaken in the coming months.

We had also previously pointed out that we believe it is likely that the ECB will continue its QE after September 2016, since the increase in inflation is currently too weak to provide a return to the ECB's objective.

However, we also believe that the euro's decline should now be more gradual and more volatile than in Q1, with variations related to economic data and monetary policy.

Note also that the risk is that the Fed's rates rise later than expected in December 2015 or early 2016, and that Greece reaches an agreement with its creditors, and in this case, the prospects become bullish for the euro."

"Anything worth having is worth going for - all the way." - J.R. Ewing



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