Euro: Mid-range trading with capped upside against US Dollar – ING

ING’s Chris Turner describes EUR/USD near 1.1600 as mid-range since April, noting Euro terms-of-trade deterioration should weigh more on the pair. ING expects a dovish ECB hike that fails to validate additional tightening priced by markets. With a quiet Eurozone calendar, they see limited justification for a break above 1.1640/45 and prefer a 1.15 end-September target after a Fed hike.

Euro holds but upside seen limited

"Near 1.1600, EUR/USD is sitting approximately in the middle of its range seen since April. As above, we would have thought that the clear decline in the euro's terms of trade would be an important factor weighing on EUR/USD this week. The fact that it is holding up quite well probably raises more questions for the dollar."

"Unlike the market, we are looking for a dovish hike – or at least a hike which does not support the additional 50bp of tightening priced in after Thursday's expected 25bp move."

"The eurozone calendar is very quiet today. We do not quite see a justification for EUR/USD to break above resistance at 1.1640/45, but if so, 1.1675/80 beckons. At present, we prefer a 1.15 end-September target on the back of a Fed hike."

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