National Bank of Canada (NBC) argues that Euro upside against the Dollar is likely to be limited, as relative growth and interest rate differentials still favor the United States. The bank highlights that European data remain mixed and that the European Central Bank is closer to easing than the Federal Reserve, constraining sustained EUR/USD gains in the coming months.

EUR/USD upside seen constrained

"We do not foresee a significant or sustained appreciation of the Euro against the US Dollar in the near term, as relative growth prospects and interest rate differentials continue to favour the United States."

"Although bouts of Dollar weakness could allow EUR/USD to test higher levels temporarily, we expect these moves to be short-lived given that the European Central Bank appears closer to easing policy than the Federal Reserve."

"Our central scenario is for EUR/USD to trade sideways with a slight downside bias, with rallies likely to encounter selling interest as long as US economic data remain comparatively robust and European indicators fail to show a convincing improvement."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)