EUR/USD: Mild constructive outlook as ECB normalization still has room to run – OCBC
|Economists at OCBC Bank expect a still Hawkish ECB and somewhat resilient Euro-area growth to underpin the Euro.
Supported on ECB-Fed policy divergence
On net, still-resilient growth in EU, somewhat hawkish ECB (vs. Fed possibly undertaking rate cut first) and potentially a moderate-to-soft USD profile should support EUR’s recovery.
Risks remain: (1) EU’s growth momentum; (2) any re-escalation in Russian-Ukraine – energy and inflation risks; (3) if USD strength returns with a vengeance (global risk-off, or Fed resumes aggressive tightening); (4) ECB unexpectedly signals dovish tilt.
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