EUR / USD will rally beyond 1.25 this summer – ING

The European Central Bank (ECB) It offered no surprises today; The phasing out of PEPP purchases was not discussed and exchange rate comments were not highlighted. The euro made it through the meeting unaffected and the focus is now on the expected improvement in euro zone data, which should help boost the EUR/USD undervalued to the upside this quarter, as reported ING.

More EUR / USD rise to come

“There were no surprises and, although the outlook is improving, the central bank remains cautious. President Christine Lagarde emphasized that there was no discussion on phasing out purchases under the Pandemic Emergency Purchasing Program and the exchange rate comments were not surprising. “

“The EUR / USD uptrend that started this month should remain in place. A lot of bad news has now been trading in the euro, the currency has been trading at a persistent risk premium for the past few months, and despite the recent surge, the EUR / USD is still cheap under our fair value model. short-term financial (around 1.5%) ”.

“Economic data in the eurozone is likely to recover in the coming months as the rate of vaccination increases. The improvement in eurozone data should translate into some advantage for the euro. Equally important, the strength of the dollar seen during the first quarter of this year appears to be waning and the currency is no longer reacting positively to strong US data points. This suggests that a lot of good news is already priced in the dollar, and together with the Federal Reserve presiding over deeply negative real US entry rates, this should weigh on the currency. “

“We expect the EUR / USD to reach and break the 1.25 level this summer.”