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Aug 08 - 02:55 PM

ING: EUR/USD Likely Directionless and Range-Bound through August

By eFXdata  —  Aug 08 - 01:30 PM

ING analyzes the EUR/USD currency pair, suggesting that it may remain stuck in a range throughout August. The following aspects form the core of this analysis:

Navigating the US Bond Sell-Off: Despite the volatility peaks of the US bond sell-off, EUR/USD has managed this period relatively well. This resilience indicates a reluctance in the markets to let go of a cyclical currency like the euro, even with a deteriorating outlook for the eurozone economy.

Narrow Scope for Dollar Recovery: The market's expectation that the Fed is done with monetary tightening seems to limit the room for a substantial dollar recovery, keeping the currency pair range-bound.

Range Prediction for August: ING had previously warned that August might be a directionless month for EUR/USD. Barring new significant developments, such as shifts in the Russia-Ukraine conflict, the bank doesn't see any strong indications that would push EUR/USD materially away from the 1.09-1.11 range this month.

Key Points:

  1. EUR/USD has handled the US bond sell-off well, showing a reluctance to shed the euro.
  2. Expectations that the Fed is finished with tightening limit a significant dollar recovery.
  3. The currency pair is predicted to remain within a 1.09-1.11 range through August, lacking strong catalysts to move outside this range.

Conclusion: ING's analysis depicts a directionless and range-bound picture for EUR/USD through the month of August. The market's reluctance to abandon the euro and the belief that the Fed's tightening cycle is complete contribute to this stable outlook. Investors may find this insight useful for short-term trading strategies, acknowledging that significant unexpected developments could always alter the projected range.

ING Research/Market Commentary


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