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EUR/USD holds lower ground. Economists at INg expect the world’s most popular currency pair to stay below parity in the coming days.

Estimating impact of energy caps

“The EUR-USD 2-year swap rate differential has re-widened in favour of the dollar and while we have highlighted on multiple occasions how the rate differential is indeed playing a secondary role in EUR/USD dynamics lately, this has reduced the room for a euro recovery further down the road.”

“There is still some uncertainty on whether the government’s efforts to freeze hikes in energy bills would have a predominantly dovish impact on central banks (as inflation would be lower) or a hawkish impact as the economic impact would be smaller and that allows more tightening. While markets wait for more clarity on this, the dollar’s resilience may keep EUR/USD at or below 1.0000 in the coming days.”

 

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