Forex Flash: Draghi isn't likely to begin talking down the Euro just yet - UBS

According to Mansoor Mohi-uddin, Managing Director of Foreign Exchange Strategy at UBS Macro Research: “The euro continues to benefit across the board from the unwinding of last year's short positions,” the analyst says, who adds: “Given the likely dovishness of Japan's,  Britain's and Australia's central banks, EURJPY at 1.26, EURGBP at 0.87 and EURAUD at 131 are likely to be bought on dips still for now. But euro bulls also need to be wary of increased verbal interventions,” Mr. Mohi-uddin suggests.

“For example, President Hollande warned the euro has reached 'very significant' levels. In addition political risks are rising,” while “Later this month, Italy holds general elections.” Also, Mansoor notes “The next key test of the euro is the European Central Bank meeting in the week ahead. The Governing Council is set to keep interest rates on hold at 0.75% and President Draghi isn't likely to begin talking down the euro just yet,” he concludes.