ANZ Research discusses EUR/USD outlook and adopts a neutral bias in the near-term.
"EUR/USD is caught in the nexus of geopolitics, inflation and elevated growth concerns. Risk reversals show greater balance in the market and imply that price consolidation may continue for some time yet. Our view is that a resolution to the Ukraine conflict would see the euro rally and the dollar sell-off, as it typically does in periods of high US inflation and early-stage Fed tightening," ANZ notes.
"The dollar is not benefitting from enhanced interest rate support whilst the rapid flattening in the 2-10s yield curve raises growth concerns. Much good news seems priced in for the USD and our forecasts reflect caution over the potential for future USD strength. Resolution to the Ukraine conflict is required to encourage euro buying, but our view remains that euro strength would complement the more hawkish guidance from the ECB and help to contain imported," ANZ adds.