EUR/USD - Bullish Driving Forces
✅ Eurozone inflation remains a challenge but signals resilience
✅ Eurozone trade deficit nearly eliminated in May
✅ Slower pace of ECB rate cuts compared to the Fed in 2024
✅ ECB maintains a strong stance against inflation
✅ Continued Eurozone growth with a measured ECB approach
✅ Policy rates likely haven’t peaked at 3.00%
✅ Further ECB tightening supports medium-term Euro strength
✅ ECB to maintain its path for a while longer
✅ Potential for another 150 bps rate hikes to reach 4% terminal rate
✅ Growth and monetary policy trends favor the Euro
✅ US inflation decline, China’s reopening, and cheaper gas prices reduce recession risks
✅ Continued rate hikes seen as a positive driver for the Euro
✅ Eurozone economy and currency outlook remain strong
EUR/USD - Bearish Driving Forces
🔻 Eurozone underperformance versus the US weighs on the Euro
🔻 Potential end to ECB rate hikes amid an underwhelming economy
🔻 Interest rate and growth differentials favor the US over Europe
🔻 Russia removing Euros from its wealth fund
🔻 European Commission forecasts Eurozone economic decline in Q4 2022 and Q1 2023
🔻 Italy’s rising debt poses risks for the Eurozone
🔻 Inflation risks remain high, while growth risks trend downward
🔻 ECB shifting focus from inflation control to economic worries
🔻 Europe faces significant economic distress
🔻 Eurozone bracing for a tough winter
🔻 Underwhelming growth may see ECB lagging behind the Fed
🔻 Eurozone remains the biggest economic casualty of the Russia-Ukraine war
🔻 Germany faces an increasing likelihood of recession
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