Greenback puts euro under threat in currency wars - Rabobank

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FXStreet (Guatemala) - Analysts at Rabobank noted that by the end of last year is was becoming evident that the ECB had become a winner in the currency war, taking the baton from the BoJ.

"By wiping the markets into a frenzy of anticipation ahead of the introduction of the asset purchase plan, ECB President Draghi pushed the EUR into a path of rapid depreciation."

"The plunge in EUR/USD was facilitated by the broadbased rise in the USD which was supported by widespread expectations that the Fed could be hiking interest rates by the middle of this year. On the back of a spate of soft US data releases, those expectations now lie in tatters and the USD’s downtrend is showing signs of reversing."

"The dollar index has broken below its 100 day sma. For the first time since the downside trend in EUR/USD started last July it posted a monthly gain in April. EUR/USD1.1265/80 is a key resistance level (the 38.2% Fibonacci retracement from the December high and daily lows throughout February). "

"While a sustained break above would be another constructive short-term signal for the USD we maintain that the sell-off in the greenback is likely to run out of steam."

"The stronger USD has been a major catalyst in the war against low growth and weak inflationary pressures being waged in various part of the world. If the USD sell off persists, there is risk that several central banks will reassert their dovish positions in order to ensure that relative interest rate differentials remain clearly in favour of the greenback."
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