EUR/USD likely to trade side-ways into year-end

Euro Area inflation expectations in the long term declined once again after the disappointing ECB meeting and muted inflationary pressure is likely in the time horizon.

"We expect EUR/USD to trade side-ways into year-end as the data calendar is light and event risks (eg, Fed, ECB) are behind us. Yet, we think 2016 will bring about another year of significant EUR depreciation with the Fed/ECB policy divergence taking centre stage", says Barclays in a research note. 

EUR real effective exchange rate is near its January levels, after ECB announced its QE first. This is likely to imply longer policy accomodation which could send EUR to a lower level than previously expected.

Currently EUR/USD is trading at 1.0865.