BTMU FX Strategy Research notes that the EUR continues to ramp higher against the USD with a potential test and break back above key resistance at the 1.2000-level looking increasingly likely in the coming months.
“The latest economic data releases from the euro-zone are unlikely to turn the tide. The ECB will have been pleased yesterday by the upside inflation surprise in July which saw the annual rate of core inflation tick higher by 0.1 point to 1.2%. It provides further tentative evidence that underlying inflation pressures are beginning to gradually firm although it still remains uncomfortably below their target.
From that perspective the sharp strengthening the euro if sustained is unwelcome and could prompt a downgrade to their inflation outlook which favours only a very gradual pace of policy normalization in the coming years.,” BTMU adds.
Source: BTMU Research
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