In the European market, the euro / dollar hovered at the level of 1.0885. The intra-day exchange rate started a mild retracement after rising slightly to a high of 1.0908 in the early Asian market. The intraday low touched 1.0869, and it has rebounded from the low.
Recently, the euro started to withdraw after approaching the 1.10 mark last week, and it fell steeply for two consecutive trading days. It continued to maintain the downward trend this trading day.
Regarding the future trend of the euro / dollar, the latest article by Nordea Bank analysts said that the expectations of the EU ’s common debt and the overall relaxation of regulation may be too optimistic, but buying a euro “lottery” in the option field may be worth it. The bank also saw the upside potential of the euro.
The Bank believes that the possibility of the Karlsruhe ruling proves to be a medium-term obstacle for the European Central Bank (ECB) is very low.
Earlier in early May, a spokesman for the European Central Bank said it was evaluating the German court ’s ruling and would comment in due course.
The German court stated that some actions of the European Central Bank were considered illegal and invalid in Germany. The ECB ’s actions were not supported by the EU Treaty, and the ruling does not apply to actions taken against new coronary pneumonia. The ECB can solve the problem within three months, and the ECB must show that quantitative easing measures are appropriate.
Fabio Panetta, member of the European Central Bank’s Executive Committee, said that the decision of the German Federal Constitutional Court was directed against the German Federal Government and the Bundestag, and the German Central Bank is in dialogue with the German authorities. This comment is by far the strongest signal that the European Central Bank has no intention of responding directly to German court requests to explain why quantitative easing is directly proportional to the economic challenges of the Eurozone, and instead relies on German institutions to take the lead. If the issue remains unresolved within the next three months, the court will prohibit the German central bank from participating in the plan.
Andreas Vosskuhle, President of the German Constitutional Court, expressed his firm belief that the decision of the European Central Bank is beneficial to Europe because it strengthens the rule of law. In the medium and long term, the effects of the ECB ruling will become more apparent. The ruling on the European Central Bank ’s stimulus plan is not an assessment of the mechanism currently under discussion, but an assessment of the Public Sector Bond Purchase Scheme (PSPP). The result of the ruling may only be the temporary end of a long process.
Nordea analysts pointed out that if the French-German debt proposal (miraclely) passes the test in the next week and is unanimously supported by the EU 27 countries, we believe this will be a major positive event for the euro.
Nordea pointed out that if the Eurozone adds a new regulatory environment to the common debt of the European Union, the Euro may usher in the day of “Hallealia”. Lawmakers have begun to consider whether to cancel MIFID II, which may be a major positive for the profitability and credit growth of the banking industry as a whole.
Nordea expects that the euro / dollar will be struggling in general during the tightening of the euro area’s regulatory burden relative to its US counterparts. “
Nordea said that if MIFID II is assumed to fall and the hedging cost of the EUR / USD remains at the current low level, we think that the EUR / USD may reach the 1.20 mark by then.
At 16:55 Beijing time, the euro / dollar was reported at 1.0884 / 87.