Analysts at JPMorgan continue to see EUR/USD at 1.34 at the end of Q3 and 1.30 at year end following the ECB decision.
“The total package is slightly more than expected from the ECB but well short of what the Fed, BOJ and even BOE did when they crossed the rubicon,” head of FX John Normand wrote.
“Draghi under-delivered on rate cuts, over-delivered on ending SMP sterilization and spun the LTROs to give the impression of an ever-expanding balance sheet. But overall, the package won’t expand the balance sheet meaningfully, so the euro impact from these policies looks over.”
Strong words and the market agrees with EUR/USD touching 1.3650 as shorts puke up their positions.
Their forecast for a lower EUR/USD comes from the US side of the equation, not broader euro weakness.
