Euro thoughts from Westpac on what is driving EUR/USD, they say its politics; and what'll send it reversing - which WPAC believes is divergent monetary policy.
I've summarised the report, and the bolding is mine for emphasis;
The past month has seen the Euro again push higher to 1.17
- partly due to strength in European partial data
- but arguably more so because of a further waning of support for the US dollar
Here political sentiment is key
- Seemingly, every week that passes sees confidence in President Trump's ability to deliver reform and growth further eroded
At the same time, belief in the cohesion of the Euro Area and the robustness of future growth gains greater strength
In terms of monetary policy however, there remains a chasm between the reality facing the US and Europe
- Rate hikes and a reduction in the balance sheet is planned for the US
- In Europe, the balance sheet will merely grow at a less-rapid pace through 2018
Sentiment aside, this relative policy stance implies that the US dollar will soon reverse course and weigh on the Euro
What say the traders of ForexLive?
