Barclays on the euro, see downward pressure on EUR/USD this week

Author: Eamonn Sheridan | Category: News

Barclays expect EUR/USD to stay 'broadly range bound' but outline downside risks ahead this week

  • a rebound in the USD
  • euro area growth is moderating and could be further negatively affected by a potential US-EU trade war
  • We estimate that if the US implements its threat of a 25% car tariff against European car imports, 2019 Euro area growth could be hit by as much as 0.4pp, down from 1.6% to 1.2-1.3%
  • a no-deal Brexit, as we have been arguing recently, would still have a significant effect for Europe, given that the UK is a major trading partner. 
  • while we expect no major escalation of political risks in Italy before the European elections, the current equilibrium is very fragile, especially against a backdrop of decelerating economic activity and banking sector fragilities
  • Data are unlikely to be much of a tailwind either
(in summary from the note)
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