EUR: Investors To Play EUR Cautiously Till May-31; Dips In EUR/USD A Buy – Nordea

Nordea FX Strategy Research notes an interesting pattern in Euro Area inflation data that could could have an implication on EUR trading through the end of May.

“EA core inflation surprised massively in April, rising to 1.2% and boosting EUR via ECB “Septaper” hopes. However, when we saw a fairly similar deviation vs the average seasonal pattern in 2016, half of that deviation was corrected the following month.

If half of April’s core inflation overshoot is corrected in May, markets will need to digest core inflation at 0.9% on May 31. This is one reason why market participants are likely to play the EUR cautiously until then. If EA core inflation surprises to the upside, then the story of inflation convergence between EA and US is really alive – especially given the new setback in US core inflation on Friday,”  Nordea notes.

Strategy-wise, Nordea expects EUR/USD to range-trade in the near-term and keeps recommending buying EUR/USD on any substantial dips.

EUR/USD is trading circa 1.0930 as of writing 

Source: Nordea Research

The article is published by one of the foremost sources of Forex trading information. Link to the original article above.

from eFXNews

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