EUR/USD is trading near 1.0900 after the Fed and ECB meetings. In the opinion of ING economists, Market doubts about ECB guidance may be a bigger factor in the near term, delaying another big EUR/USD rally until Q2.
Rate differentials can swing significantly in favor of the EUR
“Remains EUR/USD rate differential more likely to tilt in favor of Euro this year. However, another major rate-driven EUR/USD rally may not take place this quarter, as in March meetings the Fed may oppose rate cut speculation and the ECB continues to struggle to sell its tightening plans to the market.”
“In the second quarter of this year is when the ECB-Fed divergence may emerge more clearlygiven that we expect the ECB to raise another 25 basis points and signal strongly that rates will not be cut for some time, while an acceleration of the slowdown in the US economy and inflation will sharply challenge any promise by the Fed to keep rates at 5.0% for a long time.”
“We aim at 1.15 in the EUR/USD in the second quarter of 2023, and 1.12 in the fourth quarter of the year“.
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
