EUR/USD: Euro’s value higher than price – BNP Paribas

Economists at BNP Paribas consider the value of the European currency is superior to its current price but do not see a significant change in the EUR/USD pair which is sitting at 1.0947.

Key quotes

“We expect the Fed to maintain the official rate at its current level this year. The prospect of some pick-up in growth should lead to a gradual increase in Treasury yields.” 

“The ECB’s state-dependent forward guidance and the sluggishness of the inflation process imply that the very accommodative environment will remain in place for a long time.”

“We presume the increase in Bund yields to be smaller. Sovereign spreads in the eurozone should decline.”

“We expect little change in EUR/USD even though the euro’s fair value is quite higher than current pricing.”