If both the Fed and the ECB are now being driven entirely by data, the risk-reward ratio seems considerably more attractive on the Dollar side in view of the economic data from the US and the Eurozone over the past few days. 

Thursday’s strong US data suggests that the Fed will leave the key rate at peak levels for longer and will not cut interest rates as quickly as the market might have originally expected. Just to stress this at the end: that does not change our expectation that the Euro will be able to appreciate over the coming months.

Our projections are based on the expectation of our ECB experts that the ECB – contrary to the Fed and contrary to what the market is currently expecting – will not cut its key rate again. If that does happen, that clearly constitutes a positive surprise for the Euro. This did not become less likely on Thursday, but at best moved a bit further into the future than we currently assume in our EUR/USD forecast.