Euro Forecast: EUR/USD to Weaken if ECB Increases Bond Buying
Fundamental Euro Forecast: Neutral
The recent sharp rise in sovereign bond yields, including those issued by Eurozone governments, has clearly unsettled members of the European Central Bank’s policymaking Governing Council.
That means action is possible at their meeting this coming Thursday. There will be no major easing of monetary policy, such as a cut in interest rates, but a decision to step-up bond purchases is possible and such a move would be negative for EUR/USD. Advertisement
Euro price to weaken if ECB steps up bond purchases
Member after member of the European Central Bank’s Governing Council was warning last week that the ECB would have to respond to the recent surge in sovereign bond yields around the world as traders reacted to fears of higher inflation when the global economy recovers from the slump caused by the Covid-19 pandemic.