EUR upside limited on oil's recovery - BTMU

FXStreet (Guatemala) - Analysts at Bank of Tokyo Mitsubishi explained that the euro has continued to remain relatively stable against the US dollar so far this year.

Key Quotes:

"There has been limited directional impact from the recent more dovish signals from both the ECB and the Fed which have cancelled each other out in the near- term. President Draghi has provided a strong signal that further ECB easing is likely in March weighing on the euro."

"The latest FOMC statement displayed a more cautious tone as well supporting market expectations that further Fed tightening will be only very gradual. The release of the Q4 GDP report should confirm that the US economy lost growth momentum heading into this year. However, the report will likely exaggerate the pace of the slowdown driven by a large inventory drag which the Fed has already acknowledged."

"The latest ADP survey may also exaggerate a potential slowdown in employment growth early this year. Payback employment weakness is likely following the seasonal boost to employment growth at the end of last year. More encouragingly the employment cost index should provide further evidence that wage growth is accelerating. The downward correction in risk assets and crude oil has lost momentum recently reducing upside risks for the euro."