Quotes from Rabobank:
-While the Fed is likely to govern the outlook for the USD in the coming months, the ECB may have less control over the EUR. The upward trend of the euro effective exchange rate from late 2012 into early 2014 can be linked with the recovery in demand for peripheral debt as the impact of the EMU crisis dulled.
-In its effort to counter deflationary risks, we expect that the ECB will start buying government debt as part of QE programme by the end of Q1, though an announcement could come as soon as January. In theory this should depress interest rates across the curve and so lower the attraction of the EUR.
-However, it is unclear if the commencement of this policy will trigger further inflows into peripheral debt which would be EUR supportive. In addition, the Eurozone may have to contend with another wave of political uncertainty from Greece while this would likely weigh on the value of the EUR, it would also bring unwanted stress back to the region.
The material has been provided by InstaForex Company – www.instaforex.com