EUR/USD has dropped below 0.9900 for the first time since October 2002. Economists at ING expect the world’s most popular currency pair to extend its slide towards the 0.9600/9650 area.

75 bps hike is a leap too far for the ECB

“The gas news has sent EUR/USD to a new low for the year and it is not obvious where the next support levels exist – perhaps 0.9850 and then not until the 0.9600/9650 area.”

“We feel that the weekend package of support measures to the German economy does not go far enough – worth just 2% of GDP compared to 15% of GDP levels of support seen through the pandemic.” 

“We think a 75 bps hike at Thursday’s meeting is a leap too far for the ECB – we look for 50 bps. This will not help the euro.”