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- EUR/USD: Upward bias intact - ANZ
EUR/USD: Upward bias intact - ANZ
FXStreet notes that sentiment towards the USD has deteriorated sharply in recent weeks as fiscal commitment is questioned. On the other side of the pond, EU fiscal intervention buys the euro some time, economists at ANZ Bank apprise. EUR/USD recorded tops in levels last seen in May 2018 just beyond 1.18 the figure on Wednesday and is set to retain the upside bias.
“Failure by Congress to agree the next phase of the fiscal stimulus before supplementary unemployment benefits expired, a loss of momentum in high-frequency activity indicators and an easing bias at the Fed are weighing on the currency. Fed funds are not expected to rise until 2025, cementing expectations of lasting yield erosion whilst futures contracts are flirting with the idea of negative policy rates from mid-next year.”
“The surge in demand for gold and simmering US-China geopolitical tensions have also detracted from the USD’s safe-haven status.”
“The EU has agreed a EUR 672.5 billion Recovery and Resilience Fund (RRF), equivalent to 4.8% of nominal GDP. The weighting of the package towards fiscally weaker EU countries coupled with the ECB’s pandemic bond purchases has shelved EA crisis risks. That policy intervention is welcome, is seen in a rising appetite for EUR.”
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