Economists at ING discuss EUR/USD outlook.

1.05/1.07 to prove the base for a push towards 1.15 in the third quarter

“There were reports in the market yesterday of some upside interest in EUR/USD going through the FX options market. We can see why. 1.0700 is a decent support area for EUR/USD and we do see the outside risk of a break to 1.0500. However, the eurozone terms of trade story is so much better than it was last summer and that is why our medium-term models identify EUR/USD as very under-valued.”

“Our view is that 1.05/1.07 proves the base for a push towards 1.15 in the third quarter, once clearer signs of US disinflation and slowing activity become a lot clearer.”

“Expect EUR/USD to stay soft near 1.0700/0720 and perhaps take a decisive turn on the release of the US inflation data.”

See – US Core PCE Preview: Forecasts from four major banks, inflation to stay elevated in April