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EUR/USD: The immediate catalyst for a new bullish breakout is not obvious – ING

EUR/USD has galloped towards 1.09. The economists of ING They analyze the pair’s prospects.

Risk in Italy’s rating

EUR/USD briefly recovered on Thursday on the back of initial jobless claims data, but it is not evident that there is a clear and immediate catalyst for a breakout to the upside.

After today’s closing, andThere is a risk that Moody’s will make a decision on Italy’s rating. Moody’s has the Italian sovereign rating one notch above “junk” and with a negative outlook. However, we doubt that Moody’s will downgrade Italy’s rating to “junk” today, as it would not want to be seen to be starting a turmoil in European government bond markets.

However, a downgrade would be a surprise and would renew interest in a possible showdown between Italy and Brussels early next year if the eurozone debt brake were introduced. This would be negative for the Euro and, in our opinion, would put EUR/CHF back at 0.95.

Source: Fx Street

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