In advance of what could be a very aggressive Fed tightening cycle, analysts at ING remain bullish on the dollar. Regarding EUR/USD, the recent hawkish turn from the European Central Bank (ECB) suggests the pair will probably play out a broad 1.10-1.15 range this year.

March will be a pivotal month for financial markets

“10 March sees the ECB release new inflation forecasts and potentially opens the door for a 4Q rate hike. 16 March sees the Fed release new Dot Plots and possibly starts off the cycle with a 50bp hike. We currently look for five hikes in total from the Fed in 2022.”

“Expect realised volatility to continue to rise.”

“Our preference now is that EUR/USD traces out something like a 1.10/1.12 to 1.15 trading range as we brace for major central bank tightening.”