After a few weeks of significant advances, EUR/USD made a significant correction but never went too far. What’s next?

Here is the TD FX Strategy Research view, courtesy of eFXnews:

EUR/USD: Modest Consolidation; Near-Term Dips Buying opportunities – TD

TD FX Strategy Research thinks the balance of risks favor some modest EUR/USD consolidation into Jackson Hole, especially noticing that it is likely that ECB President Draghi will not deliver any fresh news on monetary policy.

” This leaves the EUR vulnerable to a buy the rumor, sell the fact outcome. A few press releases this week also underscored the ECB’s modest discomfort with the strength of the EUR. This is slightly at odds with the minutes, which showed the ECB was comfortable with the current level of the exchange rate,” TD adds.

“Still, positioning looks stretched near-term, and we look to use any dips as buying opportunities.” 

EUR/USD: Scope For A Move Towards 1.15 Post Jackson-Hole Before Higher – ING

ING FX Strategy Research has been arguing since the July ECB meeting that markets might have got ahead of themselves when it comes to pricing in the ECB’s next steps.

“Less aggressive expectations over the timing and pace of QE tapering chimes with our message that EUR/$ will first move lower before moving higher from these levels.

While the EUR has so far shown the resilience of a boxer refusing to go down despite taking a few big hits, we believe that signs of a more cautious ECB over the coming weeks may see some of this resistance fade.

We continue to see scope for a EUR/USD retrace towards 1.15 post-Jackson Hole.” 

EUR/USD: Topping Out; An Opportunity For The Patient USD Bull – BNPP

BNP Paribas FX Strategy Research notes that EUR/USD appears to be topping out with momentum model signals that EUR momentum has peaked, while positioning analysis framework suggests EUR/USD positioning is stretched long.

“A compelling case could be made for entering EURUSD shorts at this time, targeting a move down towards our 1.13 year-end target for the pair.

While a tactical short EURUSD spot position may well play out favourably over the next two weeks, we think the risk-reward would be more attractive to position for a more meaningful move lower later this year.

As such, BNPP prefers to play EUR/USD via an optionality structure via adding a bearish EUR/USD bearish one-touch calendar spread.'