The slow rally in EUR / USD reflects a slower distribution of both the Recovery Fund and Covid vaccines, Westpac economists say. They estimate that the 1.1950-1.2350 range is likely to persist towards the European Central Bank (ECB) meeting on Thursday, March 11.
Key statements:
“The EU covid vaccine vaccination process has suffered from various logistical and bureaucratic hurdles. Although the total number of vaccines administered in the region now stands at almost 35 million, this is a large deficit compared to initial expectations and is decidedly less than in the UK (> 21 M) and the United States (> 85 M) ” .
“Regional lockdown restrictions may be about to be relaxed, but there is growing concern about the persistence of new COVID-19 cases as new variants are imposed. The economic consequence is a possible delay in recoveries that could undermine the optimism shown in recent PMIs. “
“The ECB has stressed that it will maintain the flexibility of the PEPP and that it has more policy tools to provide support if necessary.”
“EUR / USD is likely to remain contained within the effective range of 1.1950-1.2350“.
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