DailyFX Tips & Picks: Analyst’s pick
CURRENCY STRATEGIST
CHRIS VECCHIO
My pick: Long euro-dollar from $1.3825, long euro-yen from ¥141.50
Expertise: Fundamental and technical analysis with risk management
Average time frame of trades: A few hours to a few weeks
The most significant event to dislodge the euro from its recent resiliency was commentary from ECB president Mario Draghi on Thursday. A higher euro is helping keep non-core costs constrained, helping fiscal policymakers. But considering that consumption remains low in a tepid jobs environment, inflation for the sake of inflation could do more harm than good. In an era of deleveraging, consumers will be forced to forego spending elsewhere if non-core inputs rise, weighing further on growth. For now, Draghi’s warning on the elevated euro exchange rate is just that. The bar is high for the ECB to entertain non-standard easing measures. We’re staying long on the euro – for now.