EUR/USD: A long way to walk – Westpac

Analysts at Westpac Institutional Bank are predicting a measured and steady recovery for the European currency in the next months. 

Key quotes

“The move higher for Euro will be measured and steady, with EUR/USD unchanged at its current level until March, and then only rising a cent per quarter to USD1.12 at year's end. This trend is set to continue in 2021, through to USD1.15.”

“If Euro were to gap higher and/or GDP growth disappoint our 1.0%/1.2% expectation for 2020/2021, then the ECB may look to jawbone the currency.”

“Although we are forecasting a 10bp cut to the deposit rate mid-year in response to the FOMC's first cut, this should only be regarded as a token gesture. There is no economic or financial market justification to take the deposit rate towards –1.0%, or any belief that it would be effective.”