This via ANZ on the euro , the bank wary of continued risk
- Our near term forecasts for EUR/USD anticipate consolidation in a 1.14-1.20 range. A decisive break below the 1.1350 area is needed to open up EUR downside and a retest of 1.05. Political and trade uncertainty would have to deteriorate significantly.
- ·It is premature to declare that euro area uncertainties are over. Questions remain around how the new Italian government will agree to prioritise its spending objectives, how Rome will interact with Europe and how the US-EU trade dispute will evolve.
- ·The ECB is closely monitoring developments. We expect it will taper quantitative easing (QE) later this year. The risk is that extended uncertainty could undermine confidence in the inflation outlook, implying interest rates will remain at current levels for longer.
