EURUSD: ECB Preview
Dismal PMI data today, but and the first half of the year puts ECB under pressure to act fast. I was looking for a change in forward guidance in the July meeting, and interest rate cut with additional easing in the September meeting. The political situation in Italy adds to investors’ worries that snap elections might be called. As the economic situation deteriorates in EU and especially Germany the ECB needs to act fast.
The global growth outlook doesn’t help, as the US – China trade war tensions escalate and geopolitical issues arise in many parts of the world and especially in the Middle East. IMF cut its forecast for global growth by -0.1pp for both 2019 and 2020, to 3.2% and 3.5%, respectively. Traders forecasting a 25 basis point interest rate cut by Fed next week lower than the anticipated 50 bp cut the previous week.
EURUSD broke below the 1.12 mark this week and continues lower. Today EURUSD is trading close to yearly low at 1.1138 and in case the ECB delivers a 10 basis points cut and additional easing tomorrow a pullback down to 1.11 and below is the most possible scenario.Don’t miss a beat! Follow us on Twitter.
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