A note via TD on the euro 9this from mid week but its not a day trade piece so still relevant)
(in brief, bolding mine)
Our current forecast profile calls for EURUSD to grind higher this year but market visibility has deteriorated rapidly in recent weeks. Neither leg of the pair presents a compelling positive case right now, helping keep spot pinned within tight ranges.
- We retain our bullish strategic call on the EUR
- there are several factors that could see us pivot away from this view. In particular, US trade tensions could shift more squarely to the EU in the next month. The upcoming Section 232 report on US auto imports and formal US-EU trade negotiations are the key risk events going forward.
- It is not our base case, as the US administration is more likely to use the threat of tariffs as a tool at the negotiating table. If auto tariffs are imposed, however, these would represent a potentially significant shock to growth and confidence.
- The tariff threat may gain some EU concessions
- US-EU trade talks are likely to follow a more contentious path ahead
- We do not expect a full-blown trade war to erupt, but an escalation of EU-US trade tensions could represent the single most under-priced risk to our EURUSD forecast profile.
- Many of the EUR's current negatives are now in the price, but an additional growth shock could push the ECB into an outright easing bias. This, we think, could send EURUSD to fresh lows for this cycle and has the potential to see a stronger USD emerge overall.
