Euro: ECB credibility may offer support against Dollar – DBS
DBS Group Research’s Philip Wee argues that the Euro has a subtle advantage over the Dollar this week, as the European Central Bank’s recent hikes and focus on inflation underscore its institutional credibility.
Scotiabank strategists Shaun Osborne and Eric Theoret indicate that the Euro (EUR) is weaker, having declined about 0.5% against the US Dollar (USD). This trend is driven by risk aversion, which has fueled a broader strength in the USD. Based on yield spreads, the fair value of EUR is estimated to be near 1.1633. Currently, there is support around the 1.15 level, with limited near-term resistance before 1.1650.
The European Central Bank (ECB) is becoming more hawkish due to rising energy prices, with Executive Board member Schnabel stating that the increase is "quite concerning." However, there are few fundamental releases, and Tuesday's ZEW investor sentiment survey will be crucial for assessing industrial production. The EUR has weakened and is entering the Monday session with a 0.5% decline, ranking as a mid-performer among G10 currencies amid a backdrop of broad-based USD strength.
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