EUR/USD Outlook Constructive Near Term – Westpac
Richard Franulovich, Strategist at Westpac, has reiterated the constructive outlook for EUR/USD into next week’s ECB meeting.
“Not entirely surprised by EUR/USD’s poor tone in recent days – it has been repealed repeatedly on probes into the 1.14+ zone in the last year. Not clear that there should be much more downside from here though, and certainly not beyond 1.12 into next week’s ECB meeting”.
“The limits of ECB easing has dominated the conversation recently and a slew of German officials have launched a scathing broadside against the Bank’s accommodative stance, going as far as blaming the ECB for the rise of right-wing parties in the Eurozone”.
“Criticism of the ECB from these quarters is of course nothing new but the intensity is unprecedented. Against that backdrop Draghi’s room to manoeuvre is heavily constrained and one would expect more measured language, curtailing yet further already restrained easing hopes”.
“Hard to see Draghi sounding too dovish, especially given the latest expanded measures have yet to fully take effect (i.e. the next round of TLTROs)”.
“EUR apt to appreciate on the day. Upside risks to the advance April EZ PMIs due next week, reflecting the more constructive US/China global PMIs, should add to the EUR’s recovery scope next week”.