EUR/USD has been on the rise, enjoying Macron’s performance as well as the weakness of the US dollar. Could it extend its gain?
Here is their view, courtesy of eFXnews:
Nomura’s economists expect the ECB to start communicating tapering at its September meeting and expects tapering to start at the beginning of next year.
In that regard, Nomura believes that potential of the ECB’s withdrawal of monetary easing by the ECB should be an important theme in the FX market after the French elections.
“We expect the combination of diminishing political risk premium and steps toward ECB policy normalisation to strengthen EUR broadly into H2 this year,” Nomura projects.
Nonetheless, Nomura argues EUR upside risks could be more significant in the near-term if ECB members continue to suggest weaker commitment to the current forward guidance.
EUR/USD is trading circa 1.0793 as of writing.
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