EUR/USD took its time, but ultimately the Fed's hawkish message resonated with the US yield curve and EUR/USD slumped back to the recent lows. Economists at ING analyze the pair’s outlook.
Looking vulnerable
Until this late cycle Dollar strength breaks, EUR/USD remains vulnerable – especially since it does not enjoy any support from extreme undervaluation according to our medium-term fair value models.
1.0600/1.0610 looks like the last line of support before 1.0500, which could be the direction of travel should the Bank of England (BoE) fail to hike today and GBP/USD break sharply lower.
On the calendar today is the European Central Bank's Isabel Schnabel, who will surely market the risks of another ECB rate hike. However, Friday sees the release of flash European PMIs for September, another negative event risk for the Euro.
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