EUR/USD: ECB Doves to keep the euro under pressure – CIBC

Economists at CIBC Capital Markets expect the doves on the European Central Bank (ECB) Governing Council to remain in the driver's seat. Consequently, the shared currency is set to remain under pressure.

Absence of uptick in wages data points towards EUR shorts being rebuilt as EUR/USD heads towards 1.10

“The market is currently pricing in around 18bp of tightening by year-end, as market-rate assumptions have advanced by around 20bp over the last couple of months. We remain unconvinced of the risk of early ECB action, and see a more resolutely dovish central bank as likely to keep the euro under pressure.” 

“The failure to breach the mid-point of the trading range seen over the last two years at 1.1492 supports our notion of EUR weakness.”

“The absence of an uptick in wages data points towards EUR shorts being rebuilt as the currency heads towards 1.10 and levels not seen since Q2 2020.”