Analysts at Nomura explain that EUR/USD looked close to breaking 1.19 this week, but it has rallied back up towards 1.2125 as ECB minutes showed the ECB to be optimistic on inflation, despite recent weakness.
“Furthermore, the ECB showed limited concerns over EUR appreciation, while repeating financial conditions remain accommodative. Finally, the ECB said that “the language pertaining to various dimensions of the monetary policy stance and forward guidance could be revisited early in the coming year,” which could take the market by surprise in H1. We continue to expect euro outperformance this year, looking for EUR/USD to reach 1.30 by year-end.”
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