EUR/USD on the cusp? - Westpac

Ross J Burland FXStreet

Analysts at Westpac argue that the greater part of Eurozone data underperformance, both in outright terms and relative to the US, is mostly in the rearview mirror.

Key Quotes:

"Key event risk later this week – the ECB meeting (April 26) and Q1 US employment cost index and advance GDP (April 27) - will likely prove decisive in whether EUR/USD breaks down through key four-month range support, c. 1.2150-1.2200."

"It’s not clear that the “soft patch” will prompt the ECB will fundamentally alter course."

"For one, pre-meeting comments from ECB officials do not suggest a material change of stance is on the table. This week’s meeting does not have the same profile as quarter-end meetings where staff projections are updated either."

"Draghi will surely reiterate the risks from a high euro, that inflation is not yet self sustaining and that recent soft data reaffirm the need for “persistence and patience”."

"But, these comments hardly constitute a meaningful dovish lurch and will be well discounted. Meanwhile, core Eurozone inflation is gradually creeping higher and unemployment continues to trend lower."

Author

Ross J Burland

FXStreet

Ross J Burland, born in England, UK, is a sportsman at heart. He played Rugby and Judo for his county, Kent and the South East of England Rugby team.

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