The EUR/USD pair is finding support around 1.17 but an expanding growth and policy divergence with the US leaves risks of a multi-week break below the mentioned level intact, economists at Westpac report.
See – EUR/USD: Defending 1.1700 is key to see a rebound towards 1.1835 – SocGen
EUR/USD could rebound toward 1.1800-1.1850 in the week ahead
“The steadier July US CPI has alleviated immediate downside pressure on EUR/USD, but an expanding growth and policy divergence with the US, even as the US battles a larger Delta covid wave, leaves risks of a multi-week break below 1.1700 intact.”
“Fed tapering is coming into view in the next several months, while ECB could well announce an extension of pandemic asset purchases beyond September, in line with the Bank’s recent dovish strategic review.”
“EUR/USD could see upside toward 1.1800-1.1850 in the week ahead but seems set to eventually probe new lows in coming weeks as Fed tapering comes into view.”