EUR seen gathering pace in H2 – TDS

According to FX Strategists at TD Securities, the single currency stays poised to appreciate vs. the buck during the second half of the year.

Key Quotes

“With French elections looking set to evolve in line with polling, markets should turn their focus away from Frexit risks, and toward the improving macro backdrop in the EZ and the likely gradual shift from the ECB over the next few months toward a less dovish tone. We’re likely to see the balance of risks around growth shift to neutral at the June meeting, and potentially the “or lower” dropped from the rates guidance”.

“As Europe’s political risks recede, focus returns to traditional macro drivers. Solid growth provides support although the tick lower in inflation pressures will keep the ECB side-lined for now. While we think hopes for a broad-based EUR rally are still premature, markets may race ahead of fundamentals, leaving risks skewed to the upside. EUR strength on the crosses should also be seen vs. the USD in H2”.