BNY’s Head of Markets Macro Strategy, Bob Savage, highlights that the Euro has come under significant pressure, with EUR/USD trading near 1.15 as economic sentiment indices for both the EU and the euro area continue to decline below the long-term average of 100 [1]. Specifically, EU economic sentiment dropped by 1.5 points to 96.7 in March, while euro area sentiment fell by 1.6 points to 96.6, indicating a further weakening in confidence [1]. The report attributes the heavy selling of EUR to ongoing stagflation and energy concerns, which have led to cautious rebalancing flows into the currency despite persistent macro headwinds and rising price expectations [1]. Savage notes that INR and EUR have been the most-sold currencies since the end of February, driven by balance of payments and stagflation fears [1]. While normal rebalancing would typically involve adding to EUR and INR positions and reducing exposure to CNY and BRL, the underlying drivers supporting these positions—such as uncertainty and elevated price expectations—remain intact and may even strengthen [1]. The overall market sentiment is characterized by increased uncertainty and rising price expectations across sectors, signaling weaker growth momentum for the Eurozone [1].
CONCLUSION
The Euro continues to face selling pressure due to stagflation and energy concerns, with sentiment indices falling further below the long-term average. Persistent macro headwinds and rising price expectations suggest cautious rebalancing flows and ongoing uncertainty. Market participants remain wary of the Euro's outlook as growth momentum weakens.