Via an ING note on the euro and European Central Bank, analysts at the bank say much more of a move higher is premature.
In brief:
- euro is lagging other pro-cyclical currencies in the G10 (excluding the US data-dependent CAD)
- euro has the lowest three-month correlation with two-year USD swap rates
- a move to 1.1000 seems premature given the still sticky inflation picture in the US
- European Central Bank … A June cut is fully priced in and a near guarantee at this stage, but latest eurozone data suggests data-dependency will be a more likely message from ECB President Christine Lagarde as opposed to dovish guidance
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Reminder, the European Central Bank June meeting is on the 6th:
This article was written by Eamonn Sheridan at www.forexlive.com. Source