EUR/USD to drop substantially on a break below March 2020 low at 1.0635 – BBH

FXStreet Insights Team FXStreet

EUR/USD is nearing a test of the March 2020 low near 1.0635. Further losses are likely, economists at BBH report.

ECB tightening expectations have eased a bit

“The swaps market is now pricing in 125 bp of tightening over the next 12 months vs. 150 bp at the start of this week, with another 75 bp of tightening priced in over the following 12 months that would see the deposit rate peak near 1.5%. This still seems way too aggressive to us.”

“We look for a test of the March 2020 low near 1.0635. After that is the February 2017 low near 1.05 and then the January 2017 low near 1.0340.”

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FXStreet Insights Team

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