FXStreet reports that economists at the National Bank of Canada expect the shared currency to gain some ground but remain cautious as there are some hurdles ahead.

“An executive board member of the ECB reiterated that they expect inflationary pressures to abate as of next year and current levels are not indicative of a change in stance on monetary policy. The statements are not supportive of significant euro appreciation.”

“Part of the depreciation in the euro follows the trend seen in other major currencies. We believe some of the fears arising from the Delta variant should subside in the US and the euro area appears to have a slower rise in new cases.”

“While the ECB should stay the course, for now, the Fed could take its time in order to see how the US deals with the latest rise in cases.”

“We expect some appreciation of the euro but remain wary of the aforementioned factors that could negatively impact the current account and the value of the currency.”