EUR/USD has gained quite a lot since it hit the lows of 1.0460 and even made a flash move above 1.10. However, not all are convinced that the move is real.
The team at RBS lists 3 reason to continue selling EUR/USD.
Here is their view, courtesy of eFXnews:
Selling EUR/USD is still among the favorite trades for RBS on the ground of the following 3 reasons:
1- “The Fed still sees itself on pace to raise interest rates at some point this year and normalize conditions slowly over the next several years,” RBS argues.
2- “At the same time, there may be evidence of a creeping USD shortage as cross-currency basis swaps have moved wider. The wider basis is generating higher effective offshore USD interest rates which may tend to boost the USD exchange rate,” RBS notes.
3-“Furthermore, EUR cash rates have crept to new depths below zero. This is likely to contribute to downward pressure on the EUR, in our view,” RBS adds.
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