EUR/USD - Bullish Driving Forces
✅ Eurozone inflation remains a challenge but signals resilience
✅ Eurozone trade deficit nearly eliminated in May
✅ Slower pace of ECB rate cuts compared to the Fed in 2024
✅ ECB maintains a strong stance against inflation
✅ Continued Eurozone growth with a measured ECB approach
✅ Policy rates likely haven’t peaked at 3.00%
✅ Further ECB tightening supports medium-term Euro strength
✅ ECB to maintain its path for a while longer
✅ Potential for another 150 bps rate hikes to reach 4% terminal rate
✅ Growth and monetary policy trends favor the Euro
✅ US inflation decline, China’s reopening, and cheaper gas prices reduce recession risks
✅ Continued rate hikes seen as a positive driver for the Euro
✅ Eurozone economy and currency outlook remain strong
EUR/USD - Bearish Driving Forces
π» Eurozone underperformance versus the US weighs on the Euro
π» Potential end to ECB rate hikes amid an underwhelming economy
π» Interest rate and growth differentials favor the US over Europe
π» Russia removing Euros from its wealth fund
π» European Commission forecasts Eurozone economic decline in Q4 2022 and Q1 2023
π» Italy’s rising debt poses risks for the Eurozone
π» Inflation risks remain high, while growth risks trend downward
π» ECB shifting focus from inflation control to economic worries
π» Europe faces significant economic distress
π» Eurozone bracing for a tough winter
π» Underwhelming growth may see ECB lagging behind the Fed
π» Eurozone remains the biggest economic casualty of the Russia-Ukraine war
π» Germany faces an increasing likelihood of recession