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EUR/USD: A test of the 1.050/1.0550 zone is not inconceivable – ING

At the beginning of the week, the EUR/USD pair bounced slightly and tried to break above the 1.0700 level again. ING economists analyze the pair’s prospects.

Euro finds modest support on speculation that ECB will address excess liquidity

It’s not inconceivable that the 1.050/1.0550 zone could be tested: a hawkish Fed could damage the global risk environment, and further resilience in US activity data supports the ‘higher rates’ narrative. for longer.”

As for the ECB, it is reported that the ECB plans to discuss how to deal with banks’ excess liquidity and is reportedly considering increasing reserve requirements. This would mean additional de facto tightening, so the Euro appreciated slightly on the news, but not enough to turn the tables on EUR/USD, as the pair remains under pressure from a larger rate differential between the Fed and the ECB.

Source: Fx Street

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