EUR/USD has been trading in a 1.1180-1.1380 range since late November. Economists at ING expect the pair to break the range to the downside in the first half of this new year.

EUR/USD to recover in the second half of 2022

“Our preference is still for the 1.1180-1.1380 range to be broken to the downside, but this may have to wait until US data is strong enough to convince investors of three Fed rate hikes this year (our house view) and a bigger multi-year tightening cycle.” 

“We favour the break lower coming in the early part of the year since through 2H22 the market will start to shift its focus to the first ECB hike, probably coming in March 23.”

“In short, 1H22 may be the window for EUR/USD to break a new low (e.g. 1.08/1.10) before recovery is seen towards the end of the year.”