The USD started the month dropping broadly, in particular the CHF performed well: the USD/CHF drop pulled the EUR/CHF to below 1.08, where we think the SNB intervenes more actively. SNB’s Jordan was out to reiterate that the CHF is “significantly overvalued” right late in the afternoon. So do we believe. However with any chance Trump can win, the pressure will be on.
The EUR/USD bounced further yesterday from the trendline and on to another resistance around 1.1080-1.11. This area markets the uptrend of 2016, and the EURUSD above or below it is a question of whether we are headed to 1.05 or 1.15 by year-end. With the favourable US election outcome, the bias is upward at least near term. But the EUR/USD lacks support from the oil prices – Brent oil should rise back above USD 48/bbl to confirm the EUR/USD upside.
There were divergences, especially among the EM FX yesterday: while the European EM FX gained, the EM commodity currencies and LatAm currencies were hammered. In particular the MXN declined nearly 2% as the nervousness as the new poll showed Trump chances edging higher. We don’t think that is to be sustained, and the US election is an opportunity to long the MXN rather than sell it.
Copyright © 2016 Nordea, eFXnews™Original Article
