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EUR/USD has been extending its climbdown as Europe’s vaccination campaign remains sluggish and after data from the European Central Bank showed that the pace of bond-buys remains slow. As economists at Rabobank note, the recovery path is lit but the European Union holds the switch.

Key quotes

“The Eurozone contracted by 6.8% in 2020. We forecast the Eurozone economy to grow by 4.0% in 2021, followed by 3.6% in 2022. This means we expect the economy to hit its pre-pandemic level mid-2022.”

“Based on available information we forecast that the EU recovery fund will lift GDP by 0.5% over this and next year combined.

“Economic recovery is very dependent on the roll out of vaccines. The European strategy has not been very successful so far and tensions are rising.”

“If it takes a quarter more to largely remove containment measures, i.e. taking it beyond the summer, the recovery to pre-COVID GDP levels could take almost one year longer.”