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EURUSD: Topside Momentum Stalls Amid Heightened Global Uncertainty (1/2)

EURUSD
USCEEMEABulletMarketsForeign Exchange BulletsNorth America
  • EURUSD continues to trade below its recent highs, consolidating a short-term correction seen during the latter part of this week, currently trading ~1.0820. At-the-money vols remain elevated as the outlook for both legs of the trade is subject to considerable uncertainty.
  • Near-term ECB policy appears the most unpredictable since at least last October - when a set of weak flash PMIs underpinned the governing council upping their easing pace from quarterly to sequential meetings. Analysts are leaning towards another move in April (60% implied probability of cut), but risks for a hold have significantly risen following a hawkish STIR repricing after the German fiscal change announcement.
  • Potentially decisive data coming up will be Monday's flash PMIs as well as the March inflation round kicking off next Friday - preliminary consensus points towards an uptick in expected sentiment likely underpinned by the German fiscal announcement, and on HICP, the hope would be for February's progress in the previously sticky services Y/Y inflation rate to continue - and a materialization of these factors could be used as arguments for further easing by the more dovish cohort of the governing council.
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  • EURUSD continues to trade below its recent highs, consolidating a short-term correction seen during the latter part of this week, currently trading ~1.0820. At-the-money vols remain elevated as the outlook for both legs of the trade is subject to considerable uncertainty.
  • Near-term ECB policy appears the most unpredictable since at least last October - when a set of weak flash PMIs underpinned the governing council upping their easing pace from quarterly to sequential meetings. Analysts are leaning towards another move in April (60% implied probability of cut), but risks for a hold have significantly risen following a hawkish STIR repricing after the German fiscal change announcement.
  • Potentially decisive data coming up will be Monday's flash PMIs as well as the March inflation round kicking off next Friday - preliminary consensus points towards an uptick in expected sentiment likely underpinned by the German fiscal announcement, and on HICP, the hope would be for February's progress in the previously sticky services Y/Y inflation rate to continue - and a materialization of these factors could be used as arguments for further easing by the more dovish cohort of the governing council.