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While the Eurozone’s huge current account surplus may continue to lend support, sentiment in the EUR will be eroded if politics turn sour on the issue of fiscal coherence within the region, Jane Foley from Rabobank briefs.

Key quotes

“There are a number of hurdles to be overcome in the coming days. One relates to Moody’s credit rating review of Italy on May 8, another relates to a ruling by a German court on ECB policy.  A shock decision has the potential to undermine the single currency.”

“We see the risk of another dip towards EUR/USD 1.08 in the coming weeks, and cannot rule out a drop towards the 1.05 area this summer if Eurozone politics sour.”