Currency Analyst since 2010

JP Morgan: what can move EUR?

Analysts at JP Morgan think that EUR/USD is now at its fair value of $1.3300-$1.3400 if one takes into account short-end rate spreads, peripheral spreads and equity volatility. The specialists keep forecasts for the pair unchanged targeting $1.3400 by the end of Q3 and $1.3000 by the year-end.

At the same time, JP Morgan warns that EUR/USD may fall below $1.30 this quarter of the next in one or more of the following happens:

  1. The Fed brings forward the first tightening to early 2015 due to even lower unemployment.
  2. September and December 2014 LTROs show takedown around 400B euro.
  3. The ECB launches QE because LTRO takedown is small or inflation is too low.

On the other hand, there are events which may send EUR/USD towards $1.4000:

  1. US economy fails to generate any wage or inflation pressure in Q3/Q4, thus impeding any rise in US 2-yr rates from the current 0.4% level.
  2. The Fed stops tapering due to weak activity or inflation data.
  3. Deflation in periphery ends, lifting money market rates.


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