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Sep 09 - 06:55 PM

ING: EUR/USD Outlook Ahead of ECB Policy Meeting

By eFXdata  —  Sep 09 - 03:00 PM

Synopsis:

ING expects EUR/USD to remain near the 1.1100 level this week, with the European Central Bank's policy meeting being the key focus. A 25bp rate cut is anticipated, but significant downward revisions to inflation forecasts could negatively impact the euro.

Key Points:

  • Market Reaction:

    • Friday’s Performance: EUR/USD struggled to maintain intra-day gains as market participants remained uncertain about whether the Fed will cut rates by 25 or 50 basis points.
    • ECB Meeting Focus: A 25bp rate cut is expected at the ECB's meeting on Thursday, with the quarterly forecast update being crucial. Significant downward revisions to back-year inflation forecasts could weigh on the euro.
  • Near-Term Outlook:

    • EUR/USD Range: The pair is expected to stay around 1.1100 over the next few days. External factors such as the US election debate might influence movements but are not anticipated to cause significant deviations.

Conclusion:

ING predicts that EUR/USD will likely hover near 1.1100 in the short term. While a 25bp rate cut by the ECB is expected, any major downward adjustments to inflation forecasts could negatively affect the euro. The upcoming US election debate may be a notable factor driving the currency pair in the near term.

Source:
ING Research/Market Commentary

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