EUR/USD: A test of 1.10 it looks just a matter of time – ING

The jump in US short-dated rates on a hawkish Fed has sent EUR/USD to new cycle lows. Economists at ING expect the pair to challenge the 1.10 level as the European Central Bank (ECB) stance does not seem to support the shared currency.

ECB offers little support

“It looks just a matter of time before 1.10 is tested.”

“Ahead of Thursday’s ECB meeting, we’ll get to see 4Q Eurozone GDP data and the January CPI reading. Consensus expects +0.4% QoQ for the Eurozone figure. Eurozone CPI is expected to turn the corner in January at 4.3% YoY as some base effects drop out. Clearer indications that inflation peaked at 5% in December will hardly push the ECB into a more aggressive stance.” 

“With the ECB providing no support for short-dated Eurozone interest rates, EUR/USD will remain at the mercy of the re-priced Fed tightening cycle.”