The EUR/USD firms as European investors appear to have brought money back home before the year-end, but gains above 1.3300 are unlikely, says Yuji Saito, director of foreign exchange at Credit Agricole in Tokyo. "The biggest reason behind the rally is repatriation before the year-end, although such flows will peak by the end of this week and thus the rally won't be sustained," he says. "Once the U.S. fiscal cliff problem is cleared, U.S. interest rates could rise, which is likely to put a lid on sharp euro gains against the dollar," he adds. "There's optimism that the negotiations could be settled within this year, even though it may not come in before Christmas," Saito adds. The pair is at 1.3248 after it rose as high as $1.3256 earlier, its highest level since May 1. He tips the downside at 1.2950 by the year-end.
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