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EUR/USD: Risk of further falls below 1.06 in the very short term — Rabobank

The pair EUR/USD it has rallied above the 1.06 level. As reported Rabobank economiststhe measures adopted today by the ECB and Lagarde’s response to the crisis will be decisive in guiding the outlook for the euro.

Euro volatility expected this afternoon

“It cannot be taken for granted that the euro will find support in an interest rate rise of 50 basis points. Considering that this measure could be detrimental to confidence in the financial sector and in the economy in general, it could affect the evolution of the single currency”.

“We expect the euro to be volatile this afternoon, but if the ECB does not make a firm commitment to support banks (which would lead to moral hazard issues), we risk EUR/USD further falling below of 1.06 in the very short term, due to the nervousness that prevails in the financial sector”.

Source: Fx Street

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