EUR/USD has hardly moved at all since Monday night. That does not necessarily mean that today nothing can happen, in the opinion of Ulrich Leuchtmann, Head of FX and Commodity Research at Commerzbank.

Waiting for US data

“If one believes in surprisingly high inflation levels that will be done with USD longs, if one believes in surprisingly low inflation, USD shorts will be used. However, any market participants who want to implement such bets would be well advised to wait as long as possible before implementing these positions. Not until one minute before the publication of the data.”

“The longer the period until the event that you are betting on, the more can happen in the meantime. And that creates the risk that one might lose after all – even own inflation projections turned out to be correct.”

“All moves that we see until then can be interpreted as a bet on this data publication and are likely to be revised to a considerable extent if the data turns out differently.”

ECB deposit rate, market interest rate and OIS-based market expectations

Source: ECB, Bloomberg, Commerzbank Research