The euro had difficulty finding takers in the last month, essentially lingering around the 1.16 level. The central bank remains dovish while inflation is surging. Energy prices have tapered slightly but are persisting as a challenge. Supply chain issues and the potential for a COVID-19 wave are keeping economists at the National Bank of Canada cautious for the single currency area.

Epidemiological situation, elevated energy prices and supply shortages to weigh on growth

“We remain timid on the eurozone and its currency.”

“The growth outlook is under pressure from several factors such as supply chain issues, rising COVID-19 cases, and energy prices/inflation.”

“The central bank remains on the sidelines and will likely move at a slower pace than its international peers.”