EUR/USD to edge lower towards 1.10 in the first half of the year – Westpac

Sustained EUR/USD upside is unlikely to develop while a yawning policy gap opens between the European Central Bank (ECB) and the Federal Reserve. EUR/USD a sell into 1.15 if seen, in the opinion of economists at Westpac.

ECB no match for the Fed

“Peripheral risk is back in the spotlight next week, Italy’s parliament voting on a new president. If Draghi is not re-elected, doubts likely form about Italy’s policy reform path and potential for delays in the disbursement of much-needed Recovery Funds.” 

“Sustained EUR/USD unlikely to develop while a yawning policy gap opens between the ECB and the Fed.” 

“EUR/USD a sell into 1.15 if seen, targeting a run toward 1.10 in 2022H1.”