Euro looking undervalued, especially for Germany

Following Mario Draghi’s more dovish comments earlier in the month, we now think the Governing Council is more willing to loosen policy further and have revised our already more-dovish-than-consensus interest rate and QE forecasts. Next week, the European Council is unlikely to make a decision on the EU’s “top jobs”, and will probably stop short of initiating an Excessive Deficit Procedure against Italy. Meanwhile, next week’s data releases will probably point to continued slow euro-zone GDP growth in Q2.