EUR/USD fluctuates above 1.06. Economists at ING analyze the pair’s outlook.
The market has closed the door on further ECB hikes
The European Central Bank’s Isabelle Schnabel said the ECB cannot close the door to further rate hikes. However, markets have priced in any further rate hikes and are firmly looking ahead to the 2024 easing cycle. This means that despite recent lows in US rates, two-year EUR:USD swap differentials have not narrowed meaningfully and perhaps explains why EUR/USD is struggling to take advantage of the soft dollar environment.
Given global conditions, however, we would favour EUR/USD towards the 1.0675/1.0700 today area unless US jobs surprise on the upside.
