EUR/USD: Downside risks - Westpac

According to Tim Riddell, analyst at Westpac, for the EUR/USD pair, faltering of growth prospects in both Eurozone and US since Q1 19 have allowed the 2-5yr spreads in Bunds and US Treasuries spread to come back into play.

Key Quotes

“It now suggests further downside risk for EUR/USD.”

“Last month’s surprise lift in German and Eurozone CPI reduced concerns that ECB might be forced to consider more than its planned TLTROs. This week, prior to the ECB policy meeting on 6th, CPI for both Germany and Eurozone are released.”

“Given the mild miss in France, the surprise lift in German unemployment and poor PMIs as well as potentially large base effects, might cause deeper than anticipated pullbacks in headline numbers, adding to concerns over ECB missing its targets. Political concerns over budget responsibility from Italy may also weigh on ECB and the euro.”

“EUR/USD remains at risk of redefining range lows in the low 1.10s.”