Richard Franulovich, Research Analyst at Westpac, suggests that he is not entirely surprised by EUR/USD’s poor tone in recent days – it has been repealed repeatedly on probes into the 1.14+ zone in the last year. Key Quotes “Not clear that there should be much more downside from here though, and certainly not beyond 1.12 into next week’s ECB meeting. The limits of ECB easing has dominated the conversation recently and a slew of German officials have launched a scathing broadside against the Bank’s accommodative stance, going as far as blaming the ECB for the rise of right-wing parties in the Eurozone. Criticism of the ECB from these quarters is of course nothing new but the intensity is unprecedented. Against that backdrop Draghi’s room to manoeuvre is heavily constrained and one would expect more measured language, curtailing yet further already restrained easing hopes. Hard to see Draghi sounding too dovish, especially given the latest expanded measures have yet to fully take effect (i.e. the next round of TLTROs). EUR apt to appreciate on the day. Upside risks to the advance April EZ PMIs due this week, reflecting the more constructive US/China global PMIs, should add to the EUR’s recovery scope next week. Even if the polls break toward more clearly toward “Bremain” ahead of the 23 June referendum it’s hard to see GBP forcefully unwinding its Brexit premium until the certainty of the vote is out of the way. A vicious squeeze higher likely to be seen if the vote pans out in similar fashion to the Scottish independence vote and the last UK general election (i.e. strong gains for the status quo with the polls significantly off -base), but that is a trade for another day. Event risk: A heavier week, the ECB and the advance April manufacturing PMIs the main releases of note. The UK calendar includes labour market and retail sales.” For more information, read our latest forex news.