Euro: Fair value drop points to downside against US Dollar – ING
Francesco Pesole at ING highlights that EUR/USD short-term fair value from the bank’s 60‑day model has fallen below 1.150, with equities and rate differentials driving moves more than Oil.
ING analyst Francesco Pesole reveals that the EUR/USD exchange rate has slipped below 1.150, according to the bank's 60-day model, driven primarily by equities and rate differentials rather than oil prices. He anticipates only one more rate hike from both the ECB and Fed this year, projecting EUR/USD to reach 1.160 by year-end. However, short-term risks may push the rate back to the 1.1320-1.1330 range observed in June.
The widening spread between two-year SOFR and ESTR, now at 150 basis points, indicates a reversion to levels seen in July. European Central Bank officials have remained hawkish, with October hikes on the table, yet investors are increasingly accepting a more negative outlook.
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