Nordea Research discusses EUR/USD outlook in light of today's ECB policy decision and ahead of next week's FOMC policy meeting.
Today’s move was another smart one from the ECB from an imported inflation perspective. The market can speculate in anything from tiering over buying to cutting ahead of the September ECB-meeting.
It makes it hard to make a case for buying the EUR before that, even versus other currencies with a dovish central bank. The Fed needs to be really (!) dovish next week for our short-term view (3 months) of EUR/USD in 1.15-1.16 to materialize," Nordea argues.
"Currently, the ECB is a big headwind for such a view in to the September meeting, even though markets have priced in a lot of dovishness from the ECB by now. The moderate positive reaction in EUR/USD is a sign of that (already) dovish pricing," Nordea adds.