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Oct 15 - 12:55 AM

ING: Potential Lift for EUR From Thursday's ECB Meeting

By eFXdata  —  Oct 14 - 04:30 PM

Synopsis:

ING anticipates that the EUR may gain momentum from the upcoming ECB meeting, despite recent unfavorable eurozone data.

Key Points:

  • Market Pricing and Expectations:

    • Current interest rate markets project the ECB's deposit rate will be reduced to 2.00% by next summer, aligning with ING's eurozone team's assessment.
    • There is a slight risk that the ECB may not meet market expectations for the easing cycle, suggesting limited further widening of the two-year EUR
       
      swap differential.
  • EUR/USD Trading Range:

    • ING advises against pursuing EUR/USD positions below 1.0900 unless there is a significant spike in oil prices.
    • The pair is currently positioned around the midpoint of a two-year trading range between 1.0550 and 1.1150.
  • Seasonal Trends and Upcoming Events:

    • Historical trends indicate that November and December are generally bearish months for the USD, but the upcoming US presidential election on November 5 will significantly influence market sentiment.
    • ING suggests that EUR/USD may find support in the 1.0850 to 1.0900 range and could potentially rally if the ECB meeting results are less dovish than anticipated.

Conclusion:

With the ECB meeting approaching, ING sees a potential upward movement for the EUR, contingent on the outcomes and guidance provided by the ECB. The overall market sentiment and positioning ahead of the US election will also play crucial roles in shaping EUR/USD dynamics.

Source:
ING Research/Market Commentary

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