EUR: Look for heightened FX sensitivity to any GDP and inflation surprises - ING

As the dust settles from what ended up being a much more captivating and contentious ECB meeting than many had bargained for, the focus shifts to key EZ data this week – with 4Q GDP (Tue) and Jan CPI (Wed) prints to set the tone for near-term EUR fundamentals, according to Viraj Patel, Foreign Exchange Strategist at ING.

Key Quotes

“President Draghi may have stolen the show in Brussels last week by openly criticising the US administration for breaching the IMFC agreement on exchange rate policy, but the ECB chief’s acknowledgement that a key pillar of the EUR’s recent rally has been the relative strength of the EZ economy suggests that the currency’s sensitivity to data outturns may pick-up in the short-run.”

“Look for EUR/USD to remain neutral this week in the 1.2300-1.2500 range. In the UK, watch for the EU’s guidelines on a Brexit transition deal today, with GBP having learnt to live with the noisy domestic political backdrop.”