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16.06.2021, 08:02

EUR/USD: Delayed ECB's tapering to interrupt dollar's depreciation in 2022 – Natixis

FXStreet reports that analysts at Natixis discuss EUR/USD prospects. 

“We have the following configuration: A rapid deterioration in US foreign trade due to the strong stimulation of domestic demand through expansionary fiscal and monetary policies. A faster return to full employment than in the eurozone. The cyclical recovery is taking place faster in the US than in the euro zone following the COVID-19 crisis: this means that the US will return to full employment faster than the eurozone. We should therefore expect the expansionary monetary policies to end earlier in the US than in the eurozone.” 

“If tapering takes place from spring 2022 in the US and from the end of 2022 in the eurozone, there will be a gap between the two countries' monetary policies during 2022, with a more expansionary monetary policy in the eurozone. We should therefore expect: A long-term trend depreciation of the dollar; Interrupted in 2022 by the monetary policy gap between the US and the eurozone, as monetary policy will temporarily be more expansionary in the eurozone.”

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