EUR/USD Outlook:
EUR/USD is slightly positive, trading above its recent average and showing signs of stability. This comes despite recent Eurozone industrial data weighing on the euro, as buy-the-dip behavior persists, aligning with ING Bank's view that there remains meaningful downside risk for EUR/USD.
Key drivers:
• Rate gap: The European Central Bank is maintaining its accommodative monetary policy, while the Federal Reserve’s decisions on interest rates are supporting the USD.
• Risk/commodities: Oil prices are trending above average, which can lead to increased costs in the Eurozone, consequently impacting the euro.
• One macro factor: New data on Germany's economic sentiment could improve euro sentiment if it reflects ongoing positive trends.
Range:
Expect EUR/USD to hold steady within its recent 3-month range amid mixed signals from both currencies.
What could change it:
• Upside risk: A surprising improvement in economic indicators from the Eurozone could boost the euro significantly.
• Downside risk: A decline in U.S. manufacturing data could reinforce the dollar’s strength, exerting downward pressure on EUR/USD.
