EUR: Rally starting to feel a bit long in the tooth, but ECB can’t alter the trend - ING

Ahead of the ECB meeting tomorrow, today’s Jan EZ PMI data will give investors the first real sense of whether the euro area economy has continued its strong activity momentum into 2018, according to Viraj Patel, Research Analyst at ING.

Key Quotes

“Evidence pointing to this – as we expect – would reiterate our view that it might prove slightly difficult for President Draghi and his colleagues to argue against the fact that the recent move higher in the EUR has been supported by fundamentals – not least stronger EZ growth sentiment. EUR/USD trading above 1.23 ahead of the ECB event does feel a bit ‘long in the tooth’ (for now), but we would see any move lower as a technical correction – rather than a new trend. Central bank meetings do not change fundamentals. EUR/USD to anchor around 1.23 today – with the ECB event risk to curb upside.”