EUR/USD remains under pressure and is currently trading at 1.0672. Westpac analysts note that while the pair remains within range in the short-term, it is likely its lower limit to be breached. On the one hand the market is absolutely confident in raising interest rates at the Fed meeting on March 15 and there is a risk that the US currency will be hostage to the popular strategy of "buy on rumor, sell on facts", the reaction of the dollar will depend on the nature of the accompanying statements. However, the results of the meeting of the ECB, which was held last week and some improvement data from the Eurozone in recent years has raised concerns about a possible tightening of the positions of the central bank, analysts said.
In Westpac however, believe that the lethargy in core inflation and the lack of a clear trend towards improvement will warrant the ECB to change its position, while maintaining political risk as a deterrent. This may prompt the leadership of the central bank to reaffirm its commitment to a flexible policy.
The dynamics of EUR/USD shows the prevailing bearish sentiment and evidence of the inevitable the ECB's position against the background of structural statistics from the US, which could "unleash" the hands of the sellers, analysts say. In Westpac recommend selling of EUR/USD with the expectation of a decline to 1.04 area. Bank stays true to its forecast of 1.03 this quarter, followed by 1.01.
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