The severity of the EURUSD correction has caught out many. Economists at ING believe that the pair could race even higher to 1.05.

EURUSD may struggle to trade under 1.0250/70 today

“The very difficult question is whether this short EURUSD squeeze has run its course near 1.0365 or needs to trade higher still. Given the depth, conviction, and one-sided nature of long Dollar positioning (quite understandable given a sustained Dollar rally since summer 2021), we all need to be careful about prematurely calling an end to this correction. Indeed, EURUSD could easily trade to 1.05 were conditions/data to fall into place.”

“Pricing of the ECB tightening cycle has remained quite resilient over recent days – prompting quite a sharp narrowing in the two-year EUR-USD swap differential – normally a EURUSD positive. Those caught short EURUSD may mean EURUSD struggles to trade under 1.0250/70 today.”