Currency analysts at ING favour a benign, risk-friendly US Dollar decline and see the EUR/USD rate holding the 1.1670-1.1710 area before another attempt higher.
The Euro to Dollar (EUR/USD) exchange rate closed Friday at 1.1677, still 0.92% higher over five sessions despite giving back part of its midweek advance.
ING’s Chris Turner sees the US Treasury’s greater willingness to protect the long end of the bond market as a signal that higher yields are firmly on Washington’s radar.
Rather than treating the buybacks primarily as a credibility shock, Turner favours a softer-Dollar scenario in which financial conditions ease without a disorderly sell-off in Treasuries or equities.
ING’s preferred outcome is a “benign, risk-friendly dollar decline”, a backdrop that should favour higher-beta currencies while allowing the Euro to participate in a broader move against the greenback.
EUR/USD Can Keep Leaning Higher
Turner says the pair remains well supported and that ING prefers “a continued gentle rise in EUR/USD” as the Treasury story competes with still-elevated European energy costs.
For the immediate range, ING sees scope for EUR/USD to consolidate between 1.1670 and 1.1710 before potentially edging higher.
The bank also argues that genuine US fiscal consolidation, although not its base case, would likely be Dollar-negative if it arrived alongside a looser monetary-policy mix.
Natural-gas prices remain the principal European counterweight, but ING judges that the Eurozone economy is coping better with the energy shock than investors might have expected.
That leaves 1.1700 as the near-term pivot: a sustained break would strengthen the soft-Dollar story, while a slide back below 1.1600 would suggest the US rates backdrop is regaining control.
Our currency coverage draws on live market data, official economic releases and published bank research.
