Euro: Further downside favoured against US Dollar - ING

ING’s Francesco Pesole highlights that EUR/USD has broken below 1.1600, with the bank maintaining a downside bias consistent with its constructive Dollar view. While recent hawkish European Central Bank communication may slow the pace of Euro weakness, their near-term target for EUR/USD remains 1.1500. Upcoming German ZEW data and speeches by Christine Lagarde and other officials are seen as key inputs.

Hawkish ECB may slow euro fall

"EUR/USD finally broke below 1.1600 yesterday, and we continue to favour further downside in line with our constructive USD view. That said, last week’s hawkish European Central Bank messaging may slow the pace of the decline. Our near-term target remains 1.1500."

"The Governing Council’s view that additional tightening may still be required is likely rooted, at least in part, in the eurozone’s unexpectedly resilient growth backdrop."

"This week also gives ECB officials scope to refine last week’s policy message. President Christine Lagarde is due to speak in Vienna this afternoon, while Isabel Schnabel and Piero Cipollone are scheduled earlier in the day."

"Our macro team remains sceptical that the ECB will deliver further hikes, but developments in the Gulf may keep policymakers leaning hawkish for the time being."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)