24 Dec 2015
Parity to be the bottom for EUR/USD – ING
FXStreet (Delhi) – Research Team at ING, suggests that at the point of EUR/USD parity (or marginally below) we call for an end to the multi-quarter EUR/USD decline.
Key Quotes
“Due to the following reasons:
• The Fed is likely to be very sensitive to USD strength and any abrupt moves in USD higher is likely to cause a less hawkish Fed tightening cycle.
• Similar to the German bund sell-off in 2Q15, we expect the EZ yields to experience a one-off sharp spike higher in 2H16 as the market will re-price the ECB monetary outlook (towards a less expansionary stance ).
• EUR/USD at parity will be extremely undervalued, making it fundamentally difficult for the cross to depreciate further.
• Current account dynamics (namely EZ current account surplus) matter.”
Key Quotes
“Due to the following reasons:
• The Fed is likely to be very sensitive to USD strength and any abrupt moves in USD higher is likely to cause a less hawkish Fed tightening cycle.
• Similar to the German bund sell-off in 2Q15, we expect the EZ yields to experience a one-off sharp spike higher in 2H16 as the market will re-price the ECB monetary outlook (towards a less expansionary stance ).
• EUR/USD at parity will be extremely undervalued, making it fundamentally difficult for the cross to depreciate further.
• Current account dynamics (namely EZ current account surplus) matter.”