ING’s Chris Turner highlights that the Euro is experiencing significant headwinds due to higher energy prices and a more hawkish stance from the Federal Reserve, which have contributed to EUR/USD trading lower within recent ranges [1]. Turner suggests that if EUR/USD falls below the 1.1565/70 level, it could extend its decline toward the 1.1520 area, with 1.15 being a plausible target by the end of the month [1].
The article notes that rising energy prices are also pushing expectations for further European Central Bank (ECB) tightening, with markets currently pricing in an additional 80 basis points of tightening by next summer [1]. However, ING’s team considers this scenario highly unlikely, though they acknowledge that market participants may be hesitant to bet against further tightening until there is more clarity regarding events in the Middle East [1].
In related currency pairs, EUR/CHF is trading above 0.94, a move attributed to higher oil prices driving euro interest rates higher relative to more stable Swiss rates [1]. The dynamics in USD/CHF are also being influenced by credible Fed policy and energy market developments [1].
CONCLUSION
The Euro is under pressure from both a hawkish Federal Reserve and rising energy prices, with ING forecasting a potential move toward 1.15 in EUR/USD by month-end. While markets anticipate further ECB tightening, ING views this as unlikely, suggesting caution until geopolitical uncertainties resolve. Currency dynamics in EUR/CHF and USD/CHF are also being shaped by these macroeconomic factors.