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I think it is mostly symbolic. The changes in economic and inflation outlook will be insignificant, however, that should keep the Euro weak (as it had depreciated in expectation of such measures and renewed appreciation would have further depressed inflation).
What performance do you expect from the Euro versus its major counterparts during the third quarter of year 2014?
I expect the Euro to extend its decline against the U.S. Dollar towards 1.32.
Do you expect the interest rate to be the most important driver? And what else could determine the common currency through Q3 this year?
Yes, especially we expected interest rate differential between the U.S. and the ECB, which deteriorates further for the Euro in 2015 with the Fed starting rate hikes. In the third quarter of 2014 further improvement in the U.S. labour market should keep interest rate outlook tilted against the Euro/for the greenback, while the Eurozone inflation remains low.
What are your forecasts for the EUR/USD and the EUR/JPY and EUR/GBP for the end of Q2 and the end of 2014?
For the end of the third quarter 2014 we expect the Euro to trade at 1.32 versus the greenback, while EUR/JPY and EUR/GBP we see at 135 and 0.80, respectively.
For the end of 2014 we see the single currency falling to 1.30 against the U.S. Dollar and to 134 versus the Japanese Yen, whereas we forecast that EUR/GBP will stay at the 0.80 level, with a possibility that the outlook will be revised further downwards.