The prospects that the EUR/USD reach 1.20, highlighting the valuation of the FED, the tariffs and concerns about the US deficit as the main drivers of another rising substantial movement, were previously examined, but these issues will continue to be central during the first half of July, reports the FX analyst of ING Francesco Pesole.
The first half of July could see a potential attempt of 1.20
“On the side of the euro, the internal factors have played a more limited role. However, the publication of the June CPI figures this week could cause movements in the short -term Swap rates gap of the EUR/USD, a metric to which the EUR/USD has shown a recently high sensitivity. Within a period of two years, the differential has narrowed even more in favor of the euro. -148PB, a change of +30pb since the end of May.
“The ECB celebrates its annual forum in Sintra this week, although we do not see great risks of impact on the market since the Central Bank has already made a change in its communication at the last policy meeting and seems to be in a comfortable position to observe the data and the developments of the tariffs.”
“Our baseline remains a return to 1.15-1.16 backed by a hard line reassessment in the Fed expectations once the data does not support the latest fees of rate cuts. Even so, the current mixture of downward risks for the dollar makes the first half of July one of the best windows for a potential attempt of 1.20.”
Source: Fx Street
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