stability for the euro continued in September and the currency pair
remains on track for recording the narrowest trading range for a
calendar year (1.0711-1.1616 currently) since euro trading began in
However, the equity price collapse for Deutsche Bank in September on
fears of the health of the bank underlined ongoing concerns over the
health of the banking sector in the euro-zone.
This coupled with political uncertainty with the Italian referendum
on constitutional reform on 4th December and the Dutch, French and
German elections next year all point to uncertainties that could
potentially undermine sentiment and weaken the euro.
We are currently assuming that the tight trading range for EUR/USD may well persist with
the extension of QE fully priced and the euro-zone’s large current
account surplus providing an offset to the monetary policy divergence
that points to a move to the downside.
BTMU targets EUR/USD at 1.10 by end of the year and at 1.08 by end of Q2 2017.