EUR/USD Outlook:
The EUR/USD is currently above its recent average and shows signs of resilience, driven by a combination of economic factors. ING Bank view: ING sees meaningful downside risk for EUR/USD, given recent price action that points to persistent buy-the-dip behavior.
Key drivers:
• Rate gap: The European Central Bank is expected to maintain an accommodative monetary policy, while the US Federal Reserve may raise interest rates to attract foreign investment.
• Risk/commodities: With oil trading at recent highs, rising energy prices could further impact both currencies, though the euro's vulnerability remains higher due to geopolitical tensions.
• One macro factor: US jobless claims have fallen, indicating labor market strength, which supports the dollar's recent gains.
Range:
The EUR/USD is likely to test extremes within its recent range while remaining generally stable.
What could change it:
• Upside risk: A stronger-than-expected reading from Eurozone PMI data could bolster the euro.
• Downside risk: Renewed geopolitical tensions affecting the US dollar could weaken the euro’s position.
