EUR/USD: More days of rangebound trading, with some modest downside risks – ING

On Thursday, EUR/USD was rejected at the 1.1000 key resistance level. Economists at ING analyze the pair’s outlook.

Wide potential for the Euro to benefit from an unwinding of ECB dovish bets in the coming months

We now expect some more days of rangebound trading, with some modest downside risks for EUR/USD.

One factor that we wish to keep highlighting, though, is the rather wide potential for the Euro to benefit from an unwinding of ECB dovish bets in the coming months. 

Markets continue to price in 140 bps of easing by year-end, while our economics team only forecasts 75 bps. We expect to see those benefits to the Euro more clearly in pairs such as EUR/CHF in the short term rather than in EUR/USD, at least until a clearer Dollar downtrend emerges (in our view, a 2Q story).