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Oct 25 - 12:55 PM

EUR/USD: 2% Overvalued And Likely To Trade Decisively Under 1.16 In 1-Week; ECB Meeting In-Focus - ING

By eFXdata  —  Oct 25 - 10:45 AM

ING Research discusses its expectations for this week's ECB policy meeting.

"The highlight of the week will be Thursday’s ECB meeting. Here the ECB will be caught between; a) acknowledging that inflation risks have increased and b) wanting to push back against market pricing of an ECB hike in late 2022. Typically the ECB would try to navigate this path by not saying to much and passing the buck to a full review coming at the December 16th meeting," ING notes. 

"So far the EUR/USD correction has stalled at resistance at 1.1670/80. Our short term Financial Fair Value (FFV) models, looking at short term yield spreads, yield curves and risk sentiment point to a 2% overvaluation of EUR/USD – largely because short-dated US yields have continued to power ahead. This time next week we would expect EUR/USD to be trading decisively under 1.16," ING adds. 

ING Research/Market Commentary


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