Euro: Consolidation potential against US Dollar on CPI – ING

ING’s Chris Turner highlights that Eurozone CPI is set to be confirmed at 3.8%, well above the ECB’s target, with markets still digesting hawkish inflation forecasts and pricing around 75bp of further tightening. He sees EUR/USD supported by US tech unease and potentially extending a consolidative move toward 1.1340/50, though he expects USD/CHF to outperform on any deeper US equity correction.

Euro supported but not leading gains

"Today's eurozone data should see September CPI confirmed at 3.8% – well above the European Central Bank's 2% target."

"Markets are still reeling from the hawkish set of inflation forecasts delivered at the ECB September press conference, a key driver of the near 75bp of further tightening expected from the ECB."

"This could be worth a move all the way to 1.1340/50. But do not expect EUR/USD to be the big outperformer on a further US equity correction. We think a lower USD/CHF would take the lead there."

"EUR/USD has received a lift from this week's unease in US AI stocks and may be entering a decent consolidative phase now."

"Our team looks for just one more hike, however, and developments in French bond markets will have a big say in whether the ECB needs to tighten much more from there."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)