EUR/USD faces limited upside potential as ING analysts expect a hawkish Fed to dominate year-end trading, keeping the pair within a 1.1140-1.1200 range today despite support at 1.1110.
ING identifies strong support at 1.1110 (50% retracement) but sees a weak case for a bounce, with a hawkish Fed expected to dominate into year-end and push the pair toward the lower end of the 1.10-1.15 range. Near-term trading is seen confined to 1.1140-1.1200 today. The bearish view is the bank's own forecast, not a hard market-moving event, which limits both impact and conviction.
The dollar's strength is the mechanism behind the bearish EUR/USD call: ING expects a hawkish Fed to be the dominant theme into year-end, which would support USD against the euro. This is an analyst view of Fed policy rather than a new policy decision, so the impact is moderate.
ING analyst Chris Turner reports that EUR/USD is finding a floor at the 1.1110 technical level, representing a 50% retracement of the previous rally. Despite this support, the bank maintains a bearish outlook, citing a hawkish Federal Reserve as the dominant theme expected to drive the pair toward the lower end of the 1.10-1.15 range by year-end.
The support at 1.1110 is holding, but ING argues a hawkish Fed will be the dominant theme into year-end, making a sustained bounce unlikely and favouring a move toward the lower end of the 1.10-1.15 range.
1.1110 is the key downside support (a 50% retracement of the prior rally), and ING expects the pair to trade within 1.1140-1.1200 today within a broader 1.10-1.15 range.
ING's view is that a hawkish Fed will be the dominant theme into year-end, which would tend to support the dollar and push EUR/USD toward the lower end of its 1.10-1.15 range.