EUR/USD: Rebounds unlikely to gain much pace as eurozone confidence eases – Westpac

EUR/USD slippage below 1.17 may have proved short-lived, but rebounds are likely to be limited given the risks of faltering regional confidence ahead of the European Central Bank September meeting, according to economists at Westpac.

See: EUR/USD to climb towards the 1.20 area on a close above downtrend at 1.1772 – Commerzbank

A turn in regional confidence

“The virulence of the delta variant has meant that, despite impressive acceleration in covid vaccination programs, the easing of restrictions has been relatively limited across much of the region and in some countries certain restrictions have been reinstated.”

“The lift in activity as restrictions eased has been sound, but supply constraints and the sense that restrictions will remain to some degree for longer appear to be unwinding expectations and may well see a pullback in coming confidence surveys.”

“Although EUR/USD managed to find support below 1.1700, rebounds are unlikely to gain much pace and the risks of pullbacks in Eurozone confidence may well pressure EUR/USD support into September’s ECB policy meeting.”