More Upside For The EUR?
More Upside For The EUR?
In the short-term, we think is has a bit more room to run. The hawkish surprise is something that took many participants (us included) by surprise and the repricing could provide some additional support for the single currency.

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Going into Thursday’s ECB meeting, majority of participants were expecting a pretty boring affair, with the bar for a hawkish pivot extremely high. However, President Lagarde released her inner hawk and bund, and EUR bulls paid the price for it.
Even though Core inflation in the EU is just 0.3% above target, the big surprise in headline HICP got the attention of the governing council with President Lagarde noting the recent inflation data saw unanimous concern.
With markets now pricing in over 50bsp of tightening for the ECB by the end of the year, and the chances of a March recalibration of policy growing, that should provide a favourable environment for the EUR in the short-term.
As always we have more details about this and how we are planning to trade it in our week ahead video.


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