EUR/USD hit the 2019 lows only to bounce back and surge in a knee-jerk reaction to the ECB’s decision. Where next?
Societe Generale Research discusses the EUR outlook in light’s of yesterday’s ECB policy meeting.
“For now, Mario Draghi looks like an ageing boxer, fighting to the end. His time isn’t quite up but yesterday, he failed to keep either Bund yields or the euro down, though BTPs had an excellent day. The euro’s fall is nearly, but not quite, over. The dollar’s long rally is likewise nearly, but not quite done,” SocGen notes.
“There is still scope for the euro to fall, particularly if US/Chinese trade talks reach yet another impasse, higher tariffs are introduced and the USD/CNY rises as we expect (to 7.5) or higher. But the inability of Mr Draghi to drive the euro lower with his latest ‘QEternity’ announcement is further evidence that euro weakness from here would have less to do with the ECB, than what happens elsewhere,” SocGen adds.
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