EUR: Key support at 1.050 is waiting – ING
EUR/USD tested 1.050 yesterday and then briefly rebounded before coming under pressure again around the 1.0580 area. Intraday volatility will likely be the norm for coming days due to a stretched long US Dollar (USD) positioning, but it is clear that the momentum on EUR/USD remains bearish and investors will remain attracted to selling the rallies, ING’s FX analyst Francesco Pesole notes.
EUR/USD to trade at 1.040 in the end of the year
“The minutes of the October European Central Bank minutes showed an ongoing debate about the disinflationary trend, and some hawkish members were reluctant to go for a rate cut that was described as a “risk management” move. There is a clear shift from inflation to growth concerns in the Governing Council, but no indications of a strong consensus for an acceleration in easing.”
“Our view remains that a 50bp move in December remains very much possible, and we expect a bearish impact on the euro given markets are pricing in just over 30bp. Today, we’ll hear from Fabio Panetta, Philip Lane and Piero Cipollone, three dovish-leaning members. The 1.0500 level is a key one for the dollar and we can probably expect good support also considering the positioning picture. Still, our call for year-end remains 1.040.”
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FXStreet Insights Team
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