EUR/USD holds the range of 1.0800-1.0850. Economists at ING analyze the pair’s outlook.
A domestic idiosyncratic boost to the Euro looks unlikely
In EUR/USD, 1.0800 has been the level associated with the low-volatility FX environment recently. A break from the range-trading is possible later this week given the combined effect of the ECB meeting and US payrolls.
Looking a month ahead, we are not convinced the pair will be trading very far from its current levels, though. US data resilience may start to lose steam in March, but that may be only a gradual process, with more pockets of strong data emerging. Rates need to move lower materially to make the cost of selling the Dollar bearable.
Investors may have raised the bar to turn against the Greenback. Unless the ECB pushes back vehemently against rate cut bets (bucking its recent trend), a domestic idiosyncratic boost to the Euro looks unlikely too.
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