EUR/USD has rallied through the 1.1950/60 neighborhood but Mazen Issa, Senior FX Strategist at TD Securities, is skeptical that the pair is ready to trade on the offensive.
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“It remains too soon for the EUR/USD to be trading on the offensive again, in large part because we see greater scope for US real rates to grind higher relative to bunds.”
“The eurozone continues to lag in the vaccine race, and we expect Lagarde will remind us how growth remains underwhelming. In line with this, we expect the eurozone to lag the recovery vs. the US and UK by at least a quarter and to rebound by a much more moderate degree. These, alongside better yields in the US, should help anchor the EUR as a funding currency.”