EUR/USD remains under modest downward pressure on Monday. ING economists expect the world’s most popular currency pair to trade again soon at 0.95.
The European Central Bank is unlikely to change its hawkish rhetoric
“The energy crisis is forcing a radical change in the eurozone’s export-oriented economic framework, a theme that will prevent a quick return to levels above parity in the EUR/USD. After all, our BEER currency equilibrium model has consistently shown that the US-Eurozone terms-of-trade differential (export price divided by import price) is the main driver of foreign currency exchange rates. real movements of the EUR/USD in the medium term, and currently shows that the pair is not undervalued.”
“Like the Fed, it’s hard to imagine the ECB wanting to radically change its hard-line rhetoric at this point. But unlike the Fed, the ECB’s tightening isn’t helping its national currency.and we see EUR/USD remain weak at September lows of 0.9540 this week.”
Source: Fx Street
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