Bank of Tokyo-Mitsubishi - "A more prolonged period of political uncertainty (Italy) which could emerge if all parties fail to reach an agreement to form a workable government, resulting in fresh elections being called, poses the main downside risk to our view that EUR/USD will continue to trade for the majority of the time above the 1.30-level over the next three to six months. A potential economic slowdown in the US heading into the second quarter driven by fiscal tightening from the sequester spending cuts is due to come into force on the 1st March. This could provide an offset helping to support EUR/USD through increasing investor expectations over the potential scale and duration of the Fed’s ongoing open-ended asset purchase programme."
Ranges & Outlook for the week ahead
USD/JPY – bullish bias – (91.50-94.50)
EUR/USD – bearish bias – (1.2900-1.3300)
USD/CNY – neutral bias – (6.2150-6.2350)