Alex Weber: comments on EUR/USD
Many analysts are discussing EUR/USD berish potential these days. Some say that euro will fall below the 1.20 mark if the ECB announces quantitative easing in January. In my view, the market setup is much clearer: euro is set to break below this support area already in December. Monetary policy divergence between the ECB and the Fed keeps on growing. We've seen quite a hawkish Fed this week: they promise a rate hike in 2015 in case if economic data remains strong. Cheap oil and growing consumption in the US paves the ground for that.
As for the ECB, measures announced in 2014 combined with low rates and verbal interventions are enough to stimulate the capital outflow from the euro zone in 2015. Note that demand for the euro as a funding currency keeps on growing. Euro/greenback will likely slide to parity already in Q2 2015 without any QE.
In this case quantitative easing is an additional factor that will clearly fasten the process and pull the price to parity in a month or two. Anyway - my idea is to sell the euro as early as possible and observe the further market dynamics.