#EURUSD @ 1.03770 : A drop below 1.0300 is more likely than a rebound to 1.0500 – ING
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EUR/USD failed to break the 1.0500 threshold yesterday and has dropped back to the 1.0350/1.0400 area. Economists at ING expect the pair to drop below 1.0300.
“The Eurozone’s exposure to China is one key driver to watch for the Euro, and it could easily outweigh the benefits of lower energy prices.”
“The consensus is for German headline inflation to stabilise at 10.4% and Eurozone figures to slow slightly tomorrow. It’s difficult to see this significantly altering the ECB’s narrative, but an above-consensus print may prompt markets to seriously consider a 75 bps hike in December (61 bps are currently priced).”
“Still, hawkish ECB expectations have not often translated into a stronger Euro, and we continue to see the Dollar doing the heavy lifting in driving EUR/USD moves. At this point, we believe a drop below 1.0300 is more likely than a rebound to 1.0500.”
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