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Forex Flash: Behavior pattern of buying Euro dips reinforced - BBH

The main drivers of the Forex market have strengthened, according to Marc Chandler, Global Head of Currency Strategy at BBH, which implies that "current trends, especially euro strength and yen, sterling and dollar bloc weakness are likely to persist, reinforcing the behavior of buying EUR on pullbacks and selling into bounces of other currencies."

Marc identifies the following 4 drivers: "First, the tightening of monetary conditions in the euro area, amid some evidence that the regional economy is recovering and the German locomotive itself finding better traction. Second, the deterioration of Japan's trade balance and the aggressive pursuit of stimulative fiscal and monetary policy by the Abe government keeps downward pressure on the yen. Third, the Federal Reserve remains committed to buying $85 bln of long-term securities a month. This likely to persist through the year. Fourth, China's economy appears to have averted a hard landing."

Japan Monetary Base (YoY) 10.9% in Jan

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