Economists at Westpac expect the EUR/USD pair to trade within a 1.05-1.09 range in the short-term. What’s more, the common currency is unlikely to enjoy sustained medium-term upside given ongoing geopolitical threats.

Europe’s geopolitical threats won’t subside anytime soon

“Temporary supply chain disruptions from China’s covid lockdowns will account for some of the April activity weakness. But a more sustained real income squeeze stemming from Europe’s geopolitical threats won’t subside anytime soon. Europe natural gas prices continue to trade near all-time highs.” 

“The ECB is unlikely to ultimately deliver on the 225bp in rate hikes priced by OIS markets through end-2023.” 

“EUR is likely to be held in a 1.05-1.09 range near term.”