The euro has failed to gain traction against the US Dollar even as US technology equities sold off, with EUR/USD seeing little follow-through buying. European buy-side hedge ratios on US holdings are described as low, yet the move has not translated into repatriation flows. Instead, cash is reportedly being held in Dollars, while US Treasuries have resumed a more conventional safe-haven function, reinforcing demand for the currency.
EUR/USD Consolidation and ECB Rate Expectations
EUR/USD is expected to consolidate close to 1.12 unless a softer US jobs report shifts momentum. In rates, the market continues to price 18bp of European Central Bank hikes for December, a level seen as sticky unless equities suffer a deeper correction.
EUR/GBP Behavior Versus Rate Differentials
Separately, EUR/GBP is characterised as having moved beyond what rate differentials imply, trading around 0.83, with no immediate catalyst indicated for a rebound.
