EUR/USD exposed to further consolidation – TDS

In opinion of Strategists at TD Securities, spot remains poised to extend the current sideline theme.

Key Quotes

“Underlying inflation measures are moving sideways in the euro area, while headline inflation has fallen in recent months, despite above-trend growth and continued improvement in the labour market. We therefore think the ECB will wait until July to announce a gradual 6-month taper and drop the "or beyond" language. A rate hike is unlikely until 2019Q3”.

“The EUR should stay the main beneficiary of USD outflows if risks there intensify, but the good news is in the price for now. The ECB remains on the sidelines amid sluggish inflation while data surprises have fallen sharply as Q1 comes to a close. This leaves the EUR somewhat exposed to an extended consolidation as position risks have emerged”.