Euro: EUR/USD Bearish risks toward 1.10 – ING
ING’s Francesco Pesole reports EUR/USD has broken below its summer lows, trading near 1.1350 as Dollar strength dominates. He sees limited scope for another large break unless the Federal Reserve hikes in October and stays hawkish, in which case EUR/USD could extend losses toward 1.10.
ING analyst Francesco Pesole warns of bearish risks for the EUR/USD exchange rate, as it has dropped below summer lows and traded near 1.1350. He believes the dollar's strength is the main driver behind this decline, and a major break lower is unlikely until the Federal Reserve raises interest rates in December. Pesole notes that if US data is strong and the Fed hikes in October while remaining hawkish, EUR/USD could potentially fall further towards the 1.10 level.
Even lower oil prices may not provide relief, as markets might react more quickly to ECB tightening than the Fed. Meanwhile, AUD/USD is at two-month lows near 0.6950 due to weaker-than-expected Australian CPI data and lackluster Chinese PMI figures. USD/JPY is also facing losses below 157.00, supported by hawkish Bank of Japan expectations and intervention risks.
Gold consolidates near $4,200, benefiting from lower US bond yields and a possible AAVE token-burn mechanism announced by its founder. The US Bureau of Economic Analysis will release August Personal Consumption Expenditures Price Index data on Wednesday, as it is the Fed's preferred inflation gauge and could impact its policy decisions.
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