- The euro is weakening due to geopolitical developments and increased European defense spending.
- US isolationism is prompting Europe to boost defense budgets significantly.
- Debate exists on financing: whether it will be at a European supranational level or through local/national budgets.
- Italy, with a high debt-to-GDP ratio (~140%), may face significant pressure to increase defense spending.
- Recent narrowing of Italian-German sovereign bond spreads could reverse as investors realize national governments might bear the defense costs.
- European debt has started underperforming in financial markets, with bearish steepening of bond curves, particularly the German 2-10-year Bund curve reaching the highest levels since October 2022.
- Increased government bond supply may pressure peripheral spreads and introduce a new fiscal risk premium for the euro.
- There's minimal trade risk premium priced into EUR/USD; no immediate signs that the US consumer market will weaken or the Federal Reserve will cut rates soon.
- EUR/USD is likely to stall at 1.0450/70 and could drop to 1.0350 if Italian long-term bonds come under pressure.
- February consumer confidence data for the eurozone is expected without major impact.
- Despite low unemployment and high real wage growth, concerns over trade and European security are likely to keep European savings rates high and demand subdued.
- US isolationism is prompting Europe to boost defense budgets significantly.
- Debate exists on financing: whether it will be at a European supranational level or through local/national budgets.
- Italy, with a high debt-to-GDP ratio (~140%), may face significant pressure to increase defense spending.
- Recent narrowing of Italian-German sovereign bond spreads could reverse as investors realize national governments might bear the defense costs.
- European debt has started underperforming in financial markets, with bearish steepening of bond curves, particularly the German 2-10-year Bund curve reaching the highest levels since October 2022.
- Increased government bond supply may pressure peripheral spreads and introduce a new fiscal risk premium for the euro.
- There's minimal trade risk premium priced into EUR/USD; no immediate signs that the US consumer market will weaken or the Federal Reserve will cut rates soon.
- EUR/USD is likely to stall at 1.0450/70 and could drop to 1.0350 if Italian long-term bonds come under pressure.
- February consumer confidence data for the eurozone is expected without major impact.
- Despite low unemployment and high real wage growth, concerns over trade and European security are likely to keep European savings rates high and demand subdued.
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Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
1. AccuTrade System:
tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. Best Forex EA:
thedailyfx.com/beetle-ea/
4. Free Forex VPS:
myfxvps.com/get-it-free/
tradingview.com/v/yDFPnb1J/
2. Signal Performance:
thedailyfx.com/performance/
3. Best Forex EA:
thedailyfx.com/beetle-ea/
4. Free Forex VPS:
myfxvps.com/get-it-free/
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.