Here is a new narrative =>
Soft landing in US v/s hard landing in EU. Hence, EURUSD at 1.07 lvls!
ECB governing council is in real conundrum with weakening local services PMI plus there is worsening Chinese growth & dampened price pressures (in China). ECB account of previous meeting did suggest slowing inflation momentum, but sticky core inflation still warrants “higher for longer”. Any surprise from ECB in its upcoming meeting might not be taken lightly by the markets. And at the same time, ECB doesn’t really afford to let the optionality of rate hikes being taken away from it.
Add to it the underlying tone of Fed members and recent Fed Beige report. This only adds up to the possibility of a stronger $ and weaker € (now short term corrective rallies/ consolidations are going to be part of the trend) in the coming weeks.
So Q is to be asked if $$ is yet again apple of the eye? For now, the new narrative holds the ground well.
“1.05 or 1.0840?”