We Add Long EUR/USD Position
- By Bilal Hafeez
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- 2 min read
• EUR/USD has been grinding higher since its 1.1186 November low and could rise to 1.20 in 2022 (Chart 1).
• The recent euro stability has come despite more Fed hikes being priced, European Omicron risks and geopolitical tensions. As these risks recede, the euro could make larger gains.
• We add a long EUR/USD position to our portfolio.
The dollar has traded poorly this year even as the market priced more Fed hikes. Since the start of the year, rates markets have gone from pricing three to four Fed hikes for 2022. Despite this, the dollar has fallen 1% against the Japanese yen and is almost unchanged against the euro. This suggests FX markets have increasingly priced the hawkish Fed story.
• EUR/USD has been grinding higher since its 1.1186 November low and could rise to 1.20 in 2022 (Chart 1).
• The recent euro stability has come despite more Fed hikes being priced, European Omicron risks and geopolitical tensions. As these risks recede, the euro could make larger gains.
• We add a long EUR/USD position to our portfolio.
The dollar has traded poorly this year even as the market priced more Fed hikes. Since the start of the year, rates markets have gone from pricing three to four Fed hikes for 2022. Despite this, the dollar has fallen 1% against the Japanese yen and is almost unchanged against the euro. This suggests FX markets have increasingly priced the hawkish Fed story.
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