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EUR/USD is quite sensitive to the relative growth outlook as the pair holds a modest discount on this momentum index, according to economists at TD Securities.

Key quotes

“A stalwart of support for the EUR has been the current account surplus. With supply chains frozen, that pillar of support will erode. Fiscal meant to cushion the blow.

“We expect steeper EZ growth downgrades in the coming months, which should support our call that EUR/USD tests the 1.05 level in Q2.”