ING analysts observe that EUR/USD continues to function as a conduit where global trade and portfolio flows largely offset each other. The expectation is for EUR/USD to consolidate within a 1.09-1.11 range.
The pair has not significantly participated in recent global trade disruptions. A substantial “sell America” scenario, where European assets absorb capital outflows from the US, could alter this dynamic. Notably, European Central Bank officials appear to be positioning the euro as a robust alternative to the dollar.
While improved global trade prospects should theoretically benefit the euro, the recent recalibration of Federal Reserve rate cut expectations (from four to three this year) is exerting a slight downward pressure on EUR/USD.
Near-term, further consolidation within the 1.09-1.11 range is anticipated. Strong demand near 1.0900 following a firm US CPI release would indicate ongoing investor interest in hedging or reducing dollar exposure.
