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.

• 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%.

• Jobs & inflation: US labor market deterioration (payroll revisions, weaker sentiment) undermines the greenback’s final help; tariff-driven inflation seen as short-lived.

• 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.

• Investor flows: International demand for eurozone belongings stays sturdy, with €236bn of purchases in Might–June alone.

• 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.

• Forecast: Sees EUR/USD climbing towards 1.20 by year-end 2025 and 1.22–1.25 by late 2026.

• Dangers:

  • US inflation proves sticky, limiting Fed cuts.

  • US jobs market exhibits resilience.

  • Geopolitical shocks (collapse of peace talks, army escalation).

  • US tariffs on the EU dampen sentiment.

  • European politics (French fiscal dangers, bond market stress).

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.