EUR/USD: Test of the 1.050/1.0550 area is not inconceivable – ING

The start of the week has seen EUR/USD rebound modestly and attempt to climb back above 1.0700. Economists at ING analyze the pair’s outlook.

Euro finding some modest support from speculation of ECB addressing excess liquidity

It’s not inconceivable we’ll test the 1.050/1.0550 area: a hawkish Fed can hurt the global risk environment, and more resilience in US activity data endorse the higher for longer narrative.

On the ECB side, it was reported that the ECB is planning to discuss how to deal with banks’ excess liquidity and is apparently considering raising reserve requirements. That would be a de-facto additional tightening, so the Euro was slightly stronger on the news, but hardly enough to turn the tide for EUR/USD as the pair remains depressed on a wider Fed/ECB rate differential.