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EUR/USD – three emerging downside risks

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EUR/USD down 34 pips to 1.1802 today

EUR/USD down 34 pips to 1.1802 today

Credit Agricole CIB Research discusses EUR/USD outlook and outlines 3 downside risks in the near-term.

” 1. Global supply chain disruptions (due to
shortages of chips and other auto parts, for example) and trade barriers
have hurt global manufacturing output and trade. 

2. The ECB has recently adopted a more dovish policy stance that could keep its policy divergence with the Fed in place for longer once the Fed starts QE tapering,” CACIB notes. 

“3. If President Biden’s spending plans are successful, their positive economic impact may be less pronounced compared to their predecessors. The fiscal package will nevertheless contrast with the lack of policy activism on the other side of the Atlantic where appetite for more government spending has waned following the creation of the EU recovery fund,” CACIB adds.

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