According to ING, the EUR/USD pair is experiencing its third significant correction of the year. Despite this, ING sees this as an episodic correction and remains confident of the pair's rise towards the end of the year.

Key Points:

• Current Correction: Following the 5% and 4% corrections in February and May respectively, the current downturn for EUR/USD is around 3%. This trend seems to be a result of substantial one-way positioning, as most expect the pair to rise by the year's end.

• Future Outlook: The consensus forecast for EUR/USD stands at 1.12 by the end of the year. ING cautions against an overly pessimistic outlook on the pair, pointing out that the market has adjusted the expected ECB tightening cycle by about 15 basis points in recent weeks.

• Potential ECB Rate Hike: Despite recent market changes, ING highlights that core inflation remains high, and the upcoming September ECB meeting could still signal a 25bp rate hike.

Summary:

ING sees the current dip in EUR/USD as a temporary correction rather than a longer-term trend. It suggests that, given the current high core inflation and the possibility of a rate hike by the European Central Bank (ECB), the pair could well be on the rise by the year-end, hitting a consensus forecast of 1.12.