The Euro has already dropped a long way down from the recent highs to around 1.2350 reached in early January this year, and the time when the European Central Bank was concerned about the strength of the Euro above 1.20 already seems like a distant memory.
An upside move would take place any time soon but the consensus continues bearish as a third wave of covid-19 infections hits most EU countries with more lockdowns imposed and troubles with vaccinations. This means that the EU economy will likely recoup later and less strongly than other regions. Hence, ECB interest rates will increase later than other countries and that the currency will continue to weaken.
This week on economic data, the most important will be inflation data for Germany, France and then the Eurozone as a whole, with analysts forecasting a growth in the headline rate for the EU to 1.2% year/year in March from 0.9% in February. If that comes in below expectations, it could add to the selling pressure. Other economic data include consumer confidence data, German unemployment and retail sales, and final manufacturing PMIs ahead of the US non-farm payrolls numbers at the end of the week.
We remain short due to the US Dollar demand and Euro Covide-19 woes.
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