EUR/USD: Bullish Short-Term; Range & Outlook
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EUR/USD – BULLISH BIAS – (1.0800-1.1700)
The momentum has clearly shifted back in favour of ‘Remain’ in today’s referendum vote on the UK’s membership of the EU. The shift from 50%-50% just a few days ago to something more like 52%-48% in the opinion polls is a similar sized shift to what happened in Scotland between final polling and the actual vote. So financial markets are responding with some big moves as Brexit risk is further reduced. That would imply a much bigger potential move if there is a surprise ‘Brexit’ vote announced tomorrow.
We are assuming a bullish bias for EUR/USD on the back of our view that these latest and final polling results are indeed an accurate reflection of the final outcome. However, we see little reason to believe that this move higher in EUR/USD marks the beginning of a sustained moved. As highlighted in Topic 1 above there are numerous issues that lie ahead that will serve to curtail EUR optimism starting with the Spanish elections this weekend that may well prove inconclusive once again but show some further shift in support for Podemos. The first allotment of funds under the new TLTRO-II will take place tomorrow and will serve as a reminder that the ECB continues to implement additional monetary easing measures that should help to limit EUR upside.
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