EUR: Returning investor confidence key for the pro-cyclical bull trend - ING
|According to Viraj Patel, Research Analyst at ING, for pro-cyclical currencies like the EUR, the next set of business confidence and expectations data will be vital – especially ahead of the April ECB meeting next week.
Key Quotes
“We’ll get the latest ZEW survey this week (Tue); recall how last month we saw a sharp fall in investor sentiment (led by Germany) – which was chalked down to heightened trade war fears. The question is whether this was a major overreaction to Trumpian hype or whether the added mix of geopolitical risks has now further weighed on EZ investor confidence. If we were to see a bounce-back, it would be telling of how economic agents are willing to look through the external trade war and geopolitical noise – and focus on the (fairly) unchanged fundamentals. Complete negligence to what’s going on, however, is unlikely – the reality is that we’ll find a middle ground between ‘business as usual’ and ‘let’s wait-and-see’.”
“By extension, the same is true for the EUR bull trend; while the cyclical recovery is in pause mode, the medium-term dynamics of broad-based EZ economic strength combined with low domestic political risks and a large external surplus makes the EUR an attractive investment currency. Our year-end target is 1.30, but look for EUR/$ to trade within 1.22-1.24 for now.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.