EUR/USD to hover around 1.05/1.06 into and after the ECB meeting – ING

FXStreet Insights Team FXStreet

EUR/USD has continued to find good support despite US 10-year yields reaching 5% and risk sentiment staying unstable. Economists at ING analyze the pair’s outlook ahead of the European Central Bank meeting on Thursday.

Cautious tone

The EUR-USD 2-year swap rate differential has remained wide, at -120 bps. The impact of ECB communication on this differential is generally less significant compared to that of the Fed, and given our expectations for a cautious tone at this meeting with limited guidance provided, we don’t expect material spillovers into FX this month.

We expect EUR/USD to hover around 1.05/1.06 into and after the ECB meeting.

The Dollar leg and geopolitical events may well have a bigger say in guiding any short-term trend.

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