Having briefly dipped below 1.05 yesterday, EUR/USD has regained its composure a bit today. This Friday, attention will turn to April’s European CPI, where ING economists see upside risks. Regarding the pair, they expect some consolidation.
Upside risks for the April CPI
“We see upside risks to today’s April Eurozone CPI release, where the consensus stands at 7.5% y/y for the headline reading and 3.2% for core. A figure above consensus will certainly attract ECB hawks. However, the eurozone money market is already pricing in 87 basis points of adjustment this year, an appreciation that has done little to help the euro.
“It can be argued that in the event of an abrupt cut in European gas, the ECB will struggle to achieve a rate hike of more than 50 bps, effectively normalizing the deposit rate to zero.”
“The international environment (with stronger Asia) favors some consolidation in the EUR/USD in the short term. That could mean a limited correction to 1.0560/70, with external risk at 1.0650“.
Source: Fx Street
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