Analysts at CIBC, forecast the EUR/USD pair at 1.17 for the third quarter and at 1.15 by the first quarter of 2022. They point out that an extended period of policy inactivity from the European Central Bank, in contrast to the Federal Reserve, underlines a continued paring of real money EUR longs.
Key Quotes:
“The June ECB meeting had President Lagarde suggesting that the risks around the economic outlook were broadly balanced, for the first time under her tenure. The increasingly supportive outlook, demonstrated by strong gains in forward looking survey data, underline a substantive increase in activity and inflation expectations for both this year and 2022. Despite the stronger growth trajectory, once the postpandemic base effects wear off, the bank still assumes that prices will remain well below target at the end of the forecast profile in 2023.”
“The uptick in forward looking survey data validates a strong recovery dynamic. After a slow start, the eurozone’s vaccine rollout has gathered pace, with the proportion of the eurozone population full vaccinated now only just behind the G-7 average. Although the prospect of a broad re-opening has resulted in a sharp upgrade in private consumption expectations, we do not expect the ECB to be as activist as either the Fed or some other central banks in Europe, such as the Norges bank.”
“While the eurozone is set for a strong growth trajectory into H2, inflation is set to remain below target, in part due to the lack of second round wage effects. With longrun inflation expectations continuing to run below target, although ECB policy hawks may become more vociferous due to recovery dynamics, and may press for tapering at the September meeting, we expect the ECB to remain patient. An extended period of ECB policy inactivity, in contrast to the Fed, underlines a continued paring of real money EUR longs, with EUR/USD testing 2021 lows in the current quarter as a result.”
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. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD retreats toward 1.0850 on modest USD recovery
EUR/USD stays under modest bearish pressure and trades in negative territory at around 1.0850 after closing modestly lower on Thursday. In the absence of macroeconomic data releases, investors will continue to pay close attention to comments from Federal Reserve officials.
GBP/USD holds above 1.2650 following earlier decline
GBP/USD edges higher after falling to a daily low below 1.2650 in the European session on Friday. The US Dollar holds its ground following the selloff seen after April inflation data and makes it difficult for the pair to extend its rebound. Fed policymakers are scheduled to speak later in the day.
Gold climbs to multi-week highs above $2,400
Gold gathered bullish momentum and touched its highest level in nearly a month above $2,400. Although the benchmark 10-year US yield holds steady at around 4.4%, the cautious market stance supports XAU/USD heading into the weekend.
Chainlink social dominance hits six-month peak as LINK extends gains
-637336005550289133_XtraSmall.jpg)
Chainlink (LINK) social dominance increased sharply on Friday, exceeding levels seen in the past six months, along with the token’s price rally that started on Wednesday.
Week ahead: Flash PMIs, UK and Japan CPIs in focus – RBNZ to hold rates
After cool US CPI, attention shifts to UK and Japanese inflation. Flash PMIs will be watched too amid signs of a rebound in Europe. Fed to stay in the spotlight as plethora of speakers, minutes on tap.