Standard Chartered expects the euro to consolidate around the 1.14 level, supported by a stable European Central Bank policy outlook and improving German sentiment, but tempered by potential shifts back into US assets.
In a client note, the bank highlighted that the euro remains largely driven by both US dollar dynamics and domestic European macro data.
On the positive side,
- May’s stronger-than-expected German IFO business climate index and signs of incoming fiscal stimulus from Berlin add to euro support. The ECB is also expected to cut rates by 25 basis points next week, followed by a pause through year-end, which the bank believes should underpin the single currency.
However,
- Standard Chartered cautioned that any near-term rotation toward US assets could offset these EUR-supportive factors, keeping the EUR/USD pair rangebound.
Technically, the argue, the pair remains well-supported above its 50-day moving average.
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