EUR to struggle to establish strong direction - Rabobank

According to Jane Foley, senior FX strategist at Rabobank, the latest Eurozone’s PMI data has placed downward pressure on the EUR, insofar as it was sufficiently weak to stir concerns that the ECB could sound a dovish note at today’s policy meeting. 

Key Quotes

“While the market is hoping that the ECB’s position will be clarified by ECB President Draghi at today’s press conference, in all likelihood policy will be data dependent in the months ahead.  This suggests that the EUR is likely to struggle to establish strong direction.”

“Since the policies of both the Fed and the ECB are set to be heavily data dependent this year, it is been our view for a while that the EUR/USD could struggle to establish a clear trend in the coming months.”

“The position that ECB Governor Draghi takes at today press conference will set the tone for trading in the EUR near-term, though ultimately the outlook for the EUR/USD will be governed by the relative developments in both Eurozone and US economic and political backdrops.”

“While we expect choppy trading in EUR/USD over the coming weeks, we are reluctant to rule out risk of a move below the 1.13 level in the coming months.”