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Aila Mihr, analyst at Danske Bank, suggests that with a US-China trade deal postponed, focus for majors is clearly on where the global and the European cycle are heading and focus today will be on the German Ifo numbers.

Key Quotes

“EUR/USD has been supported in recent weeks by rate spreads moving in its favour, but towards the end of last week sentiment clearly shifted despite – or rather due to – a dovish Fed.”

“Recession fears have clearly come back with a vengeance with the inversion of the US curve on Friday and to the extent that markets are grabbed near term by fears of a wider and deeper global slowdown. The scope for this to hit the EUR negatively is tangible in our view: the Fed is already priced for cuts, whereas the ECB is one of the few central banks that is effectively open for repricing in a softer direction given its option of restarting QE.”

“We continue to see risks in EUR/USD tilted to the downside short term and the plethora of Fed and ECB speakers this week could prove instrumental in this respect.”