EUR/USD to remain within a 1.20-1.22 range until covid cases are clearly contained – Westpac

The EUR/USD pair rebounded from spikes below 1.20 but persistent lockdowns and likely official jawboning should keep the world's most popular currency pair contained within its recent range, economists at Westpac appraise.

Key quotes

“The level of covid infections remains high within Europe and within the Eurozone. A key factor that will mark the path for recovery will be how quickly current lockdown restrictions can be unwound and rapidly vaccinations are rolled out. The persistence of covid infections across the region and stuttering vaccine rollouts risk impeding recovery.” 

“The strength in ZEW expectations continue to suggest that a notable recovery should develop, but it is clear that current monetary and fiscal support will need to be equally as persistent. EUR/USD is likely to remain within a range centred around 1.20-1.22 until the region is more clearly containing the pandemic.”