EUR/USD: Unlikely to fall much further before bottoming out – ING
EUR/USD extends its downside. Economists at ING analyze the pair’s outlook.
Manufacturing concerns deepen
Eurozone PMIs continued to paint a grim picture for the region’s manufacturing outlook. That is not hugely relevant for the FX market, anyway. The soft economic outlook in the Eurozone has been priced in for a while, and with markets relatively confident about a June European Central Bank cut (23 bps priced in), it’s mostly Dollar rate expectations that are set to keep moving EUR/USD.
It remains unlikely that the pair can enjoy a sustained recovery without a decline in USD rates, but Turhusday’s positive Dollar reaction to US data appeared overdone considering the recent narrative by the Fed, and we don’t feel EUR/USD should fall much further before bottoming out.
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