EUR/USD rallied on Draghi’s optimism and only temporarily dipped when the ECB tried to play it down. Trading closer to 1.14, what levels should we look out for?
Here is their view, courtesy of eFXnews:
TD Research notes that the EUR has seen a significant rally over the past day and this reflects Draghi’s comments that signalled the recovery in the EZ may warrant a gradual wind-down of monetary stimulus at some point down the road.
“The impact of his comments have seen curves bear steepen and yields and vol spike as central banks start to hint at removing the punch bowl.
As the EUR breaks key technical levels the ECB will be cautious about the impact it may have on inflation, suggesting the move could be self-defeating.
Notably, the NEER is up 3.2% from oya and further strength could see the ECB push back given its still cautionary tone on inflation,” TD argues.
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