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16 May 2014
EUR/USD to move closer to 1.3400 - UBS
FXStreet (Córdoba) - The UBS analyst team notes that lower Eurozone inflation expectations would led the ECB to cut the main rate to 0.1% next month, adding pressure to the EUR.
Key Quotes
“Inflation expectations as measured by the ECB's quarterly Survey of Professional Forecasters continued falling in 2Q2014”.
“We believe the ECB will interpret this as an increasing risk to anchored inflation expectations and thus to the credibility of its monetary policy. We thus expect the ECB to react on 5 June by cutting the main refinancing rate to 0.1% and the deposit rate to -0.15%”.
“This should bring EUR/USD down closer towards our forecast of 1.34 in three months”.
Key Quotes
“Inflation expectations as measured by the ECB's quarterly Survey of Professional Forecasters continued falling in 2Q2014”.
“We believe the ECB will interpret this as an increasing risk to anchored inflation expectations and thus to the credibility of its monetary policy. We thus expect the ECB to react on 5 June by cutting the main refinancing rate to 0.1% and the deposit rate to -0.15%”.
“This should bring EUR/USD down closer towards our forecast of 1.34 in three months”.