The EUR/USD pair fell below 1.0500 for the first time since early January. ING economists analyze the pair’s prospects.
Some new negatives
We can probably all agree that the dominant trend is the strength of the Dollar. However, two developments this week warn that the Euro could suffer some independent weakness. Italy exceeding budget limits and some European Central Bank officials discussing large increases in Minimum Required Reserves. We believe that an increase in Minimum Required Reserves would be clearly negative for the Euro.
There seems to be no reason to fight this EUR/USD downtrend at the moment. But for today, keep an eye on German and Spanish inflation – in case it builds momentum for a final ECB hike. If not, expect EUR/USD to continue drifting towards the 1.0400/1.0410 area.
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.
