Euro might discover transient aid from greenback if seasonal developments strike once more: BofA

Investing.com — The euro has suffered a bruising encounter in opposition to the greenback this 12 months, however may see some short-term respite if the post-December Federal Reserve assembly weak spot within the greenback strikes once more. 

“Since 1999, the DXY index’s return for remainder of the 12 months after December FOMC had been damaging 64% of the time,” analysts at a Financial institution of America mentioned in a latest notice.

This seasonal weak spot within the greenback may present some aid for the euro, which has been underneath stress in opposition to the dollar for a lot of the 12 months.

Any potential respite, nevertheless, may show be short-lived as “January seasonality tends to be extra bullish for the USD, with the DXY index increased 60% of the time,” the analysts mentioned.

Waiting for 2025, the financial institution outlined two potential situations for the EUR/USD pair:

In a baseline situation the place the greenback consolidates after the FOMC assembly, the analysts counsel that “USD bulls may take into account OTM EURUSD digi places at begin of Jan ’25 with higher worth ranges.”

But when the FOMC’s Abstract of Financial Projections — set to be launched alongside the Fed’s fee choice on Dec. 18 — is extra hawkish than present market expectations for 2025 fee cuts, the greenback may finish the 12 months stronger. On this case, “EURUSD put spreads can be most popular,” the analysts mentioned.