EUR/USD is backing off the highs of 1.1285 seen earlier and is back to the middle of the 1.12 handle. The big event coming up for the euro is the ECB’s decision. Where will the euro go afterward?
Here is their view, courtesy of eFXnews:
BTMU FX Strategy Research notes that the main event this week ahead for the EUR will be the ECB’s upcoming policy meeting.
In that regard, BTMU expects the ECB to drop the signal that rates could be lowered further, and may even drop “well past” to signal that rate hikes could be delivered earlier depending on the incoming economic data.
“However, we still expect the ECB to signal that rate hikes will not be delivered before the end of QE. The risk of a more hawkish ECB policy surprise is limited in our view given that underlying inflation pressures remain very subdued,” BTMU adds.
“We judge that the balance of risks for the euro is titled to the downside given already hawkish market expectations. However with the US dollar likely to remain weak as well, the scope for a more material correction lower for EUR/USD is limited,” BTMU argues.
EUR/USD is trading circa 1.1250 as of writing.
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