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
Recently, the EUR/USD pair has exhibited a low-volatility FX environment, with 1.0800 being a significant level. However, there is potential for a departure from the current range-trading scenario later this week, driven by the collective impact of the upcoming ECB meeting and US payrolls data.
Looking ahead to the next month, we remain unconvinced that the currency pair will deviate significantly from its current levels. While the resilience of US data may begin to wane in March, this is anticipated to be a gradual process, possibly punctuated by sporadic instances of robust data. A substantial decrease in rates is essential to render the cost of selling the Dollar more palatable.
Investors might have set a higher threshold for turning bearish on the Greenback. Unless the ECB strongly resists expectations of rate cuts, going against its recent pattern, the likelihood of a domestic idiosyncratic boost for the Euro appears slim.
