ING believes USD weak spot paves the way in which for EURUSD to 1.20
ING is out with a fast be aware on the EURUSD and why they assume the pair is about to succeed in 1.20 by year-end.
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Fed outlook: Expects three consecutive 25bp cuts (Sept, Oct, Dec 2025), with extra easing in 2026, bringing the Fed’s terminal fee down to three.25%.
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Jobs & inflation: US labor market deterioration (payroll revisions, weaker sentiment) undermines the greenback’s final help; tariff-driven inflation seen as short-lived.
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USD stress: Cheaper hedging prices from Fed cuts ought to set off extra USD promoting, alongside seasonal weak spot and the danger of a brand new Fed chair in 2026.
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Investor flows: International demand for eurozone belongings stays sturdy, with €236bn of purchases in Might–June alone.
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Eurozone story: Fiscal growth in Germany might ship 2% development by way of 2026, including euro help and presumably main the ECB to tighten forward of the Fed.
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Forecast: Sees EUR/USD climbing towards 1.20 by year-end 2025 and 1.22–1.25 by late 2026.
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Dangers:
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US inflation proves sticky, limiting Fed cuts.
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US jobs market exhibits resilience.
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Geopolitical shocks (collapse of peace talks, army escalation).
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US tariffs on the EU dampen sentiment.
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European politics (French fiscal dangers, bond market stress).
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The pair is at the moment simply over three massive figures away from 1.20. That is additionally near the double-top highs the pair received to again in 2021.
This text was written by Arno V Venter at investinglive.com.
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