EUR Benefits from Better Risk Sentiment: Focus on Consumer Confidence and ECB Lending Survey"

EUR: Benefits from better risk sentiment

The eurozone consumer confidence and the ECB lending survey are in focus today as markets await tomorrow’s PMIs and the European Central Bank's decision on Thursday. We summarise our expectations for FX and rates under different scenarios in January’s ECB Cheat Sheet.

EUR/USD jumped after overnight news out of China, taking the pair closer to its short-term fair value model of 1.0980 (in our calculations). The direction of travel today for the pair will mostly be a consequence of whether Western stock indices will be able to keep the positive mood shown by Asian equities and FX. We still deem a sustainable rally to levels above 1.100 as unlikely and do not see the ECB meeting as a game changer for the euro.