EUR/USD could see 1.15 year-end

The rally in the single currency sparked in mid January seems to be in a wait-and-see mode since early February. The Greek front – parliamentary vote on Sunday on the extra austerity measures, PSI talks, bailout package, domestic unrests – has been, and it is, the main driver in the evolution of the FX markets as of late, and this week appears to be the “make-or-break” one regarding the relation between the bloc currency and Greece.
by UBS

The euro-group finance ministers meeting on February 15 has been pointed to be the deadline as the “troika” could decide whether to release the next tranche of the bailout package, vital to honour the debt rollover expiring on March 20.

M.Mohi-uddin, Managing Director of Foreign Exchange Strategy at UBS, remarks that a positive outcome from Greece will be supportive of the shared currency, at least until the second LTRO, due on February 29. So, what lies beyond the end of February? The expert remains conservative on the euro, as the ECB has hinted the likelihood of further rate cuts if the economic conditions in the bloc worsen, spilling their effects over the prices.

Reinforcing the above, members of the euro zone already embarked in more austerity measures could see their economic growth undermined in the upcoming quarters and also political risks are looming with Greece and France holding elections in the next months.

All in all, a not-so-cheerful panorama is lying ahead for the euro. “As a result we continue to see the euro ending the year at 1.15 against the dollar”, the analyst stressed.

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