Research Team at Natixis, suggests that in the current environment, the EUR/USD should correct towards our 1.09 target in the run-up to the ECB meeting.
“Expectations are, in particular, that Mario Draghi will deny rumours of a tapering, which will weigh on the EUR/USD. Our view remains that the European Central Bank will extend the asset purchase programme by six months before embarking on a tapering of these purchases. However, it is likely that Mario Draghi will wait until December before making an announcement to this effect. For one thing, core inflation (i.e. excluding energy) remains weak at 0.8%. Also, a premature tapering would hurt peripheral debts, which could hold back European growth in 2017. Be that as it may, the performance of the EUR/USD will also be penalised by some major political events, notably the Italian referendum on 4 December and then next year’s elections in France and Germany, all this when there are doubts over European construction in the wake of the Brexit vote.”