Our model for the EUR/USD pair suggests a short-term depreciation of 2%, notes Francesco Pisole, currency market analyst at ING.
EUR/USD may have difficulty trading sustainably above the 1.160-1.1650 area
“This means that the pair’s decline has effectively exceeded what would be justified by changes in the spread and other market drivers. This, combined with what was discussed in the USD section above, means that the balance of risks remains tilted towards the upside in the near term.”
“We think EUR/USD could make short explorations below 1,150, but for it to be sustainable, we will need either a broader hawkish rerating (due to strong US data) or some negative news weighing on the euro.”
“Our target of 1.18 at the end of the year remains unchanged anyway, although the pair may have difficulty trading sustainably above the 1.160-1.1650 area until mid-December.”
