EUR/USD: ECB expectations overdone - ANZ

According to the analysts at ANZ, expectations that the ECB may be laying the groundwork for an early withdrawal of monetary accommodation seem premature. 

Key Quotes

“Headline inflation appears to have peaked and there is no evidence of a sustainable recovery in core inflation yet.”

“Underlying strength in the US economy remains firm and there should be clarification of fiscal plans in coming months.”

“With attention likely to intensify on US fiscal policy, the Fed gradually raising interest rates and the FOMC discussing the future reduction in its balance sheet, policy dynamics and the business cycle remain in the USD’s favour. Whilst there may be some valuation concerns about the dollar’s level, fundamentals are supportive of it.”