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Eurozone resilience is offset by growth risks, Rabobank warns

Rabobank flags potential ECB tightening and weaker German labor conditions as factors that could weigh on EUR strength via softer consumer spending.

Reported · Written up by our desk · Central Banks

Rabobank’s Senior FX Strategist Jane Foley said Eurozone Q2 GDP and Purchasing Managers’ Index data surprised to the upside, pointing to resilience despite higher energy prices and supply disruptions.

FXStreet said Foley cautioned that several downside factors could limit Euro strength, including the breakdown of the US-Iran agreement, expectations of further ECB tightening, competition from China, and a loosening German labor market.

Foley warned the downside growth risks could show up particularly through weaker consumer spending, which may cap EUR gains even if recent data looked stronger.

FXStreet also noted FX investors are watching broader rate expectations and geopolitical developments closely as they weigh currency moves.

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