Reactions coming in response to the slump in German manufacturing data

EUR

Currency strategists at ABN Amro now are predicting that the euro will weaken further against the dollar towards 1.10 in the next week and stay that way over the next quarter. They argue that the single currency is likely to remain under pressure because of the region's darkening economic outlook.

They note that "the weaker-than-expected PMIs have resulted in euro weakness and yields also have come under pressure". Adding that "we have 1.10 for the end of March and end of June" in terms of EUR/USD forecasts.

On the German economy, the firm notes that "the recession in the German manufacturing sector is deepening, reflecting the sharp slowdown in global trade". They also expect the ECB to keep rates on hold through the end of 2020, arguing that "there is a probability the ECB will need to step up stimulus and restart QE".

As for my take, a move to 1.10 in the next week is highly improbable in my view. Sure, the euro is likely to stay pressured in the near-term but 300 pips in seven days? That's a bit of a stretch given that EUR/USD has a range of just 400 pips so far in almost the whole of the first three months of this year.