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Tuesday, 16th April 2024
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All eyes on the US, which holds the key Back  
Currencies outlook
Phelim Keogan, Chief Dealer, National Irish Bank Treasury

EUR/USD 0.93
EUR/GBP 0.63
EUR/JPY 109
USD/JPY 117

Review Q4: The Euro managed to build on the platform that the ECB set for the beleagured currency in the last quarter, but remained within the ranges predicted in the previous article. The unexpected closeness of the U.S. Presidential Elections has provided a confusing backdrop to the currency markets, whilst profit downgrades from Wall Street’s finest have come to the fore.

Outlook Q1 2001: A slowdown from quite robust growth rates on both sides of the Atlantic has become apparent in recent months. Certainly the ‘growth gap’ between the U.S. and euroland has narrowed considerably, which has eroded a significant supportive factor for the USD. The ability of the Fed to engineer a soft-landing in the economy will become the main focus in the New Year. To this end we expect no changes in official interest rates in any of the major economies in the coming quarter, barring a severe meltdown in U.S. stockmarkets. I anticipate some further upside for the Euro, but this should be limited to E/$ 98, E/? 65 and E/Yen 115; generally I foresee pretty tight ranges with the Euro to find support on any dips below $0.90. I expect the Yen to remain on the defensive and suffer sustained pressure across the board.

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