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Sluggish EUR/USD rebound reflects a slower distribution of both Recovery Funds and covid vaccines. Economists at Westpac believe the 1.1950-1.2350 range is likely to persist into the European Central Bank (ECB) meeting on Thursday, March 11.

See:  EUR/USD  to grind higher this year – HSBC

Key quotes

“The EU’s covid vaccine rollout has suffered several logistic and bureaucratic obstacles. Although the total administered vaccines across the region now total almost 35 M, this is quite a shortfall compared to early hopes and is decidedly less than UK (>21 M) and US (>85 M).”  

“Regional lockdown restrictions may be on the cusp of being relaxed, but there are growing concerns over the persistence of new COVID-19 cases as new variants take hold. The economic consequence is a potential delay in recoveries which could undermine the optimism which had been featured in recent PMIs.”

“The ECB has underscored that it will maintain PEPP flexibility and that it has further policy tools to provide support if needed. This may well be a feature as the ECB meets next week.”  

“EUR/USD is likely to remain contained within an effective 1.1950-1.2350 range.”