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FXstreet.com (Barcelona) - Lee Hardman, FX analyst at the Bank of Tokyo Mitsubishi UFJ notes that the heightened investor expectations that the ECB may soon have to act to ease monetary policy, perhaps as early as this week, to combat the increased risk that inflation will undershoot its target in the medium-term has also helped the US dollar to rebound against the euro in the near-term.

Key Quotes

“The release early this week of the PMI surveys for October should also confirm that the pace of economic recovery in euro-zone especially in the service sector has lost some momentum in early Q4.”

“With the pace of economic growth likely to remain gradual, the elevated level of excess capacity should continue to ensure that underlying inflation pressures remain subdued in the euro-zone.”

“Even if a refi rate cut is not delivered by the ECB this week, it is likely that President Draghi will deliver more dovish rhetoric setting up a rate cut at their next meeting.”
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