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J.P.Morgan Remain Bearish Medium-Term

EURUSD

Ahead of today’s ECB decision J.P.Morgan write “market focus will be on how the ECB is processing recent developments as well as on economic projections.”

  • “Since the January ECB meeting, both growth and inflation have firmed, wage inflation has been sticky.”
  • “The only aspect that has materially disappointed has been corporate earnings.”
  • “For the EUR, the direction of travel in growth has been encouraging, but in the near-term, US developments rather than the ECB is expected to set the tone.”
  • “EUR/USD fair value based on real rate spreads is between $1.09-1.1150, so there is room for upside if US data moderates.”
  • “Our bias has been that a greater wedge should open up between the Fed and the ECB given the growth gaps, which should eventually push the fair value of EUR/USD lower towards $1.03-1.05.”
  • “Recommended tactical exposure to this theme is low and only via options given the recent upturn in European growth but our bearish medium-term bias on EUR/USD remains intact given its growth and yield deficits vs. the US.”
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com
MNI London Bureau | +44 0203-865-3809 | anthony.barton@marketnews.com

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