Bank of Tokyo-Mitsubishi - "The euro has stabilized at lower levels following last week’s ECB monetary policy meeting with EUR/USD having eased back modestly from an intra-day high of just over 1.3700 recorded on the 1st February. The euro still remains within a strong upward trend which began in July of last year resulting in the trade-weighted euro rising by around 8.0% over the last six months, its largest percentage increase over that time period since the first half of 2003. The euro’s correction lower during February to date reflects a combination of rising political uncertainty in Italy and Spain which has re-widened the euro-zone’s sovereign credit risk premium, and an attempt by the ECB to dampen the euro’s strengthening momentum. However, these factors are likely to prove only temporary weights upon the euro in the near-term. We still expect the euro to strengthen further over the next couple of months towards our one and three month EUR/USD forecasts at 1.3700 and 1.3400 respectively.
Ranges & Outlook for the week ahead
USD/JPY – bearish bias – (91.50-94.50)
EUR/USD – neutral bias – (1.3150-1.3550)
USD/CNY – bearish bias – (6.2150-6.2350)"