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Forex Flash: EUR/USD could fall below 1.2000 by year-end if ECB cuts rates – UBS

FXstreet.com (Barcelona) - Central banks are being forced to change stance. Following yesterday’s weak PMI data, the European Central Bank is now likely to cut interest rates on May 2. UBS Economics expects a 25bps reduction in the refinance rate to 0.50%.

“That is likely to push the euro down into a lower 1.28-1.30 range against the dollar. The ECB is unlikely, however, to cut its deposit rate below zero just yet. Such a move would shock investors and push the euro quickly below our year end target of 1.2000.” states the UBS Research Team.

Forex: EUR/GBP rebounds after UK data

Market pressure against the Euro sent the EUR/GBP to a test of the psychological level at 0.8500 during the London opening and as the German IFO survey revealed one more reason for the ECB to intervene with a rate cut after yesterday’s weak PMI data. Then, the cross bounced and found 0.8530 (yesterday’s close at 0.8534) as the British Pound is being sold after UK CBI disappointment.
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