The EUR/USD it tested 1.1300 for the second straight day on Tuesday, but ended up closing the day virtually unchanged near 1.1280. In the opinion of the economists of ING, the pair may flatten around 1.1300 around Christmas.
Flattening up until New Years
Even though the ECB has been less dovish than expected, last week’s central bank meetings marked a marked policy divergence with the Fed. And while the Fed’s focus appears to have shifted dramatically toward discussion On inflation, the European Central Bank will struggle to ignore the impact of Ómicron, which is already translating into tight closures in some eurozone countries. We believe this is a notion that will offer a bearish underlying narrative for EUR / USD in 2022. “
“The dollar tends to underperform at Christmas. However, we believe that the recent aggressive turn by the Fed and volatile risk sentiment may largely offset the negative effect. On the EUR side, we doubt that we will see an idiosyncratic rally as the eurozone appears more prone than many other regions (such as the US) to tighten containment measures. By the way, the euro is, on average, the least likely to benefit from the weak dollar at the end of December”.
“We expect the EUR / USD to consolidate around the 1.1300 level through the New Years“.
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