Euro: 1.150 target in focus against US Dollar – ING
ING’s Francesco Pesole says EUR/USD is trading close to its short-term fair value, while expectations for improving German ZEW data and the lingering impact of last week’s hawkish ECB hike offer some support to the Euro.
ING’s Francesco Pesole has noted that EUR/USD is trading near its short-term fair value, with improving German ZEW data and the recent ECB’s hawkish policy change providing some support. However, Pesole cautions that a risk-off reaction to a hawkish Federal Reserve rate hike could swiftly push EUR/USD towards ING’s 1.150 short-term target due to the currency pair’s sensitivity to global equities and short-term rates.
The latest German ZEW data is anticipated to further strengthen the Euro’s outlook, with expectations rising from 34 to 40 for the expectations gauge and from -61 to -52 for the current situation. This week, German ZEW data appears to be the only significant market-moving release, barring any substantial revisions in the August CPI figures.
Nonetheless, the lingering impact of last week’s hawkish ECB hike remains a more influential factor in any potential Euro resilience at present. Based on our models, EUR/USD is close to its short-term fair value, with a slight tilt towards being undervalued. Although global equities and short-term rates carry the highest betas on EUR/USD currently, a risk-off scenario following a hawkish Fed rate hike tomorrow could easily propel the pair to ING’s 1.150 short-term target.
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