FXStreet (Guatemala) – Analysts at Deutsche Bank explained that persistent weakness in the oil price and downside surprises to inflation suggest that the risks are skewed toward more ECB easing this year.
Key Quotes:
“But could a decision by the ECB to taper its QE purchases later mark the end of the EUR/USD bear run and by extension the long-term dollar up-cycle? It is doubtful this would be the case because ECB decisions on QE are more relevant for the long-end of the European curve rather than near-term rate expectations.
The latter in turn exert significantly higher influence on FX (chart 5). So long as the European short-end remains anchored, it will be the pace and timing of the Fed cycle that will dominate dollar drivers rather than the pace of ECB QE.”
(Market News Provided by FXstreet)