EUR/USD to again push towards 1.25 - Westpac

This month has seen a continuation of Eurozone’s data moderation since early 2018 and although this has failed to impact EUR, the softness in surveys and inflation pressures this week highlight the potential that the forthcoming ECB meeting may reinforce the “patient, persistent and prudent” policy guidance, suggests Tim Riddell, Research Analyst at Westpac.

Key Quotes

“Although receiving less attention at present, Merkel’s coalition is notably less likely to back Macron’s aims for a more centralised EU let alone his more radical views for EU reform. Without any genuine fiscal or structural reforms (despite rail initiative in France), the ECB may again highlight that their policy remains the sole support towards self-sustaining growth within the EU.”

“EUR/USD is again pushing towards 1.25 into next week. Such levels previously prompted ECB members to cite FX risks for their growth and inflation projections. Nevertheless, USD’s failure to gain from interest rate advantages seems to be a key driver at present.”