Euro Rate Talking Points
EUR/USD[1] remains under pressure as data prints coming out of the euro-area point to a slowing economy, and the break of the March-low (1.1176) brings the downside targets on the radar as the bearish momentum appears to be gathering pace.
EURUSD Forecast: Relative Strength Index (RSI) Offers Bearish Signal
EUR/USD struggles to hold its ground following the fresh updates to Germany’s IFO Business Confidence survey as the index narrows to 99.2 from a revised 99.7 in March, and fears of a looming recession may continue to produce headwinds for the Euro[2] as the European Central Bank (ECB) sees ‘slower growth momentum extending into the current year.’
In response, the Governing Council may adopt a more dovish tone at the next meeting on June 6 as the central bank struggles to achieve its one and only mandate for price stability, and President Mario Draghi & Co. may show a greater willingness to implement a negative-interest rate policy (NIRP) as ‘the persistence of uncertainties, related to geopolitical factors, the threat of protectionism and vulnerabilities in emerging markets, is leaving marks on economic sentiment.’
The ongoing shift in U.S. trade policy[3] may force the ECB to adopt a more accommodative stance as U.S. President Donald Trump pledges to ‘reciprocate’ the tariffs imposed by the European Union (EU), and the Governing Council may further insulate the economy over the coming months amid the weakening outlook for global growth. However, the ECB may keep monetary policy on auto-pilot as the Targeted Long-Term Refinancing Operation (TLTRO) is scheduled to launch in September, and the central bank may refrain from adjusting the forward-guidance for monetary
