Brown Brothers Harriman’s Elias Haddad reports that EUR/USD briefly dipped toward 1.1500 after the ECB decision before rebounding on the US-Iran breakthrough. Haddad expects EUR/USD to edge lower and stabilize closer to 1.1400 as US growth outperforms the Eurozone. The ECB’s 25 bps hike and hawkish inflation stance are seen cushioning, but not reversing, Euro downside.
Euro pressured by weaker growth outlook
“EUR/USD dipped towards 1.1500 following yesterday’s ECB policy decision before rebounding to a high of 1.1590 driven by the positive US-Iran breakthrough. We expect EUR/USD to edge lower and stabilize closer to 1.1400, reflecting a stronger US growth outlook relative to the Eurozone. ECB rate hikes in a sluggish growth, high inflation environment, is not bullish for EUR but should help cushion the downside”
“As was widely expected, the ECB raised the policy rate 25
