Mainly due to further rising expectations of the ECB considering even additional policy measures, the EUR has been continuing to depreciate this week.
Indeed, ECB President Draghi just indicated last week that they could use additional unconventional policy measures in order to reach price stability.
From that angle this week’s focus shifts to bot inflation data and the central bank’s monetary policy announcement.
Although we do not expect any major changes as soon as next week, central bank President Draghi will likely keep investors’ monetary policy expectation strongly capped, to the detriment of the single currency. All of the above stands in contrast to the US, where the focus shifts to this week’s labour data release.
As we anticipate further improving US growth conditions, we see scope of further diverging ECB-Fed monetary policy expectations to the detriment of EUR/USD.
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