- EUR/USD: A test of 1.1100 would be in line with a re-connection with its short-term fair value – ING
Market news
20 July 2023
EUR/USD: A test of 1.1100 would be in line with a re-connection with its short-term fair value – ING
EUR/USD has slipped back to the 1.1200 level. Economists at ING analyze the pair’s outlook.
A bit more room for a correction
EUR/USD remains around 2.5% overvalued according to our short-term financial fair value model. A key input to the model, the two-year EUR-USD swap rate gap, has rewidened (in favour of the Dollar) to pre-US CPI levels, now hovering around -115/-120 bps.
We think EUR/USD is more likely to ease back from these levels than jump back higher.
A test of 1.1100 in the coming days would be in line with a re-connection with its short-term fair value.
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