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Jun 22 - 06:55 PM

EUR/USD: Vulnerable To Re-allocation Flows From The Central Bank Community - ING

By eFXdata  —  Jun 22 - 03:00 PM

ING Research discusses EUR/USD outlook and adopts a neutral bias with a downside tilt in the near-term.

"In this strong dollar environment and intervention taking place to support emerging currencies (especially in Asia), EUR/USD will always be vulnerable to re-allocation flows from the central bank community. For example, large dollar selling from an Asian FX reserve manager will see euro weights in FX reserves rise above benchmarks," ING notes. 

"Portfolio managers at the central bank will then subsequently go out to sell EUR/USD to rebalance portfolios. That looks the risk near term as Asian FX reserve managers do battle with a higher $/Asia," ING adds. 

Source:
ING Research/Market Commentary

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