EUR/USD is trading in a tight range above 0.9950. In the opinion of ING economists, the pair could retest the 0.99 level after the FOMC Chairman Jerome Powell’s remarks at the annual Jackson Hole symposium..
“Today’s EUR/USD price action should be entirely driven by the dollar’s reaction to Powell’s speech, barring further developments in the energy crisis story.”
“As we expect a moderately positive dollar hit from Powell, we think EUR/USD could retest 0.9900 support.”
“The current short-term undervaluation in EUR/USD is quite significant (around 5%), but a reduction in the risk premium seems unlikely given the large threats to the economic outlook for the eurozone, and instead a readjustment of the rate expectations differential between the Fed and the ECB could be triggered, that is, that the fair value converges to the spot and not the other way around.”
Source: Fx Street
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