17-18 July EC Summit to discuss EU Recovery Fund and possible agreement between Germany’s Constitutional Court and ECB should support EUR/USD within a 1.12-1.15 range, according to economist at Westpac.
Key quotes
“A potentially destabilising Eurozone problem might have fallen away now that ECB appears to have provided sufficient transparency on asset purchasing and commitments to adjust assets to be closer to regional proportionality to appease Germany’s Constitutional Court.”
“The EC Summit is seen as a critical juncture in the formation of a pan-EU funding mechanism that might draw closer a genuine fiscal union, placating opposition from the Frugal Four and periphery states. How long-term budget contributions are sliced and diced may prove a key means of finding a compromise.”
“Until mid-July, the progress of recovery from the lockdown will likely dominate market sentiment. This week’s surge in German retail sales may prove a harbinger of at least near-term consumer activity and so will focus attention on Eurozone retail sales.”
“EUR/USD should still find support around 1.1200 before rebounding towards the 1.15 area through July.”
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