EUR/USD’s listless price action continues. Economists at Société Générale expect the pair to slow the pace of its advance.

Inflation outlook ensures a hawkish ECB

“Energy subsidies have supported European growth at the expense of increased public sector debt, and a mild winter has significantly reduced the near-term threat of energy shortages. The growth outlook helps the Euro, and the inflation outlook ensures a hawkish ECB.”

“The impact of the ECB stepping back from the bond market while governments borrow more is to suck European investors back into European government bonds as yields rise. That is Euro supportive. From here though, the pace of Euro gains should slow, at least for now.”