ANZ suggests that given the growing economic and inflationary challenges facing the eurozone, the EUR is expected to underperform in the currency pairs going forward. They see rallies towards the 100-day moving average (100dma) near 1.0920 as good opportunities to sell EUR/USD.

Key Points:

• Economic Challenges: ANZ notes that the eurozone is grappling with economic and inflationary issues that could impede its recovery.

• Counterintuitive Rate Impact: Higher rates, normally a boon for a currency, might not have the intended positive impact on the EUR. Rather, they may hamper economic recovery, causing the EUR to underperform.

• Fading Opportunities: ANZ views any rallies of EUR/USD towards the 100dma near 1.0920 as good opportunities to sell the pair, anticipating further weakness in the EUR.

Implications:

For Traders:

• Short Opportunity: Traders should keep an eye on the EUR/USD pair for any upward movement towards the 1.0920 level. This could be a good entry point for a short position.

• Risk Management: Consideration should be given to stop-loss levels and market conditions, including economic releases from the eurozone that could affect the currency's performance.

For Policymakers:

• Impact of Rate Hikes: If higher interest rates are indeed detrimental to the eurozone's economic recovery, policymakers may need to reevaluate the timing and magnitude of any planned increases.

Conclusion:

ANZ recommends selling EUR/USD on rallies towards 1.0920, citing economic challenges and potential negative impact of higher interest rates on the EUR. Traders should be prepared to act when the pair approaches this level, but also be mindful of risks and potential economic releases that could affect the EUR's performance.