The European Central Bank convenes on Thursday to make its decision. Will Draghi drag the euro down? Here is the view from Barclays:
Here is their view, courtesy of eFXdata:
Barclays Research discusses the EUR outlook around the ECB meeting on Thursday and expects a cautious tone from President Draghi which could keep the EUR contained for now with room for near-term downside.
“We expect the Governing Council to make no new announcements about normalization or forward guidance changes. The recent softening of data and rising concerns of trade war might lead the GC members to reassess their balance of risk (ahead of the publication of the update of macroeconomic projections in June), compared with the previous meeting, where they referred to near-term upside risk.
Rates markets have re-priced accordingly as a result with the first 10bp depo rate increase in mid-2019 and the depo rate at 0 in Q2 20) but EURUSD has once again lagged the move, introducing some near-term downside.
Ultimately, we expect the pair to range-trade around our forecast of 1.22 and see little impetus for a EUR-led break to the topside,” Barclays argues.
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