Updated projections from the European Central Bank should reflect the impact of the slow distribution of Recovery Funds and coronavirus vaccines, Westpac economists say. Therefore, they estimate that the EUR / USD pair could test the support of the 1.17-1.22 range.
Key statements:
“The European Union economy is likely to be constrained well into the second half of 2021, while economies such as the UK and the US, with faster implementations of vaccination and fewer cases, will outpace the EU. The updated economic projections from the ECB may well highlight the impact with only a slight increase in regional growth compared to increases in other major economies. “
“The ECB will likely underscore its commitment to supporting the recovery and being flexible with its PEPP to avoid widening spreads and excessive yield increases, but it is not likely to alter its policies otherwise.”
“Poor vaccine performance and consequent limited recovery likely to weigh on EUR / USD, which may now struggle at the bottom of the 1.17-1.22 range, through March. “
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