The Euro could drawdown in the coming quarters in a risk-off environment – NBF

The Euro witnessed some strength on the back of the USD sell-off going into the new year. Economists at the National Bank of Canada analyze EUR/USD outlook.

EUR may recover some ground later this year assuming the outlook improves

While European Central Bank comments continue to suggest it will maintain its current stance on monetary policy until inflation moderates sustainably, market expectations differ. Inflation expectations have weakened significantly, and growth is tepid at best. 

A rate cut could come as soon as April and easing could easily match Fed expectations. As such, the Euro could drawdown in the coming quarters in a risk-off environment and may recover some ground later this year assuming the outlook improves.