EUR: Some rare positive sentiment on EUR/USD – ING
|The eurozone economy does not have a lot to shout about at the moment. And a rebound in the Chinese economy remains elusive, ING’s FX strategist Chris Turner notes.
Range breakouts should be respected
“Yet the prospect of the US economy and interest rates converging on the lower levels in the rest of the world is proving supportive for EUR/USD. This can be seen in the FX options market, where in the one-month tenor, the price of a euro call option over a euro put option has turned positive for the first time since February 2022.”
“In our recent FX talking publication, we felt EUR/USD had the legs to move to 1.12. We would like to keep this bias for the time being even though the prospect of European fiscal consolidation and potentially wider sovereign spreads may reappear in September.”
“We see EUR/USD support at 1.0985/1000 and any softer US activity data could drag it up towards 1.11. While it is tempting to say that EUR/USD will remain in a 1.05-1.11 range for evermore, we would caution that realised EUR/USD volatility has been exceptionally low over the last couple of years and that range breakouts should be respected.”
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