ING's exchange rate projections - EUR/USD rate forecast at 1.300
Foreign exchange analysts at ING considers that stresses in the bond market could continue in the short term and contribute to a further dollar correction stronger .
Nevertheless, it expects inflation fears will subside which will allow yields to stabilise. In this environment, the bank expects that the dollar will weaken again as the Fed maintains a very accommodative monetary stance. The bank has a 12-month Euro-to-Dollar (EUR/USD) exchange rate forecast of 1.3000.
US Dollar (USD) exchange rate losses to resume, Fed to stay very accommodative
ING notes the importance of US bond markets and increase in yields for short-term currency moves. The sharp increase in yields has triggered dollar gains and a dip in commodity currencies while the Swiss franc and Japanese yen have weakened.
This threat could continue in the short term; “With the Fed yet to express concern over the bond sell-off, US Treasuries could stay under pressure into the March 17th Fed meeting. EUR/USD could briefly correct to 1.17 mid-month.”
Nevertheless, ING does not consider that there will be permanent inflation threat and expects that yields will stabilise which will allow pro-cyclical currencies to strengthen again.
In short this means we regard the current dollar rally as a bear market bounce and remain fully invested in a 2Q story of a broadening global recovery, which should lift all currencies – including the EUR.
ING expects that the Euro-zone vaccine programme will eventually get into gear which will help underpin the Euro.
The bank maintains a 12-month EUR/USD forecast of 1.3000 as the dollar loses ground and the Euro posts net gains.
Nevertheless, it expects inflation fears will subside which will allow yields to stabilise. In this environment, the bank expects that the dollar will weaken again as the Fed maintains a very accommodative monetary stance. The bank has a 12-month Euro-to-Dollar (EUR/USD) exchange rate forecast of 1.3000.
US Dollar (USD) exchange rate losses to resume, Fed to stay very accommodative
ING notes the importance of US bond markets and increase in yields for short-term currency moves. The sharp increase in yields has triggered dollar gains and a dip in commodity currencies while the Swiss franc and Japanese yen have weakened.
This threat could continue in the short term; “With the Fed yet to express concern over the bond sell-off, US Treasuries could stay under pressure into the March 17th Fed meeting. EUR/USD could briefly correct to 1.17 mid-month.”
Nevertheless, ING does not consider that there will be permanent inflation threat and expects that yields will stabilise which will allow pro-cyclical currencies to strengthen again.
In short this means we regard the current dollar rally as a bear market bounce and remain fully invested in a 2Q story of a broadening global recovery, which should lift all currencies – including the EUR.
ING expects that the Euro-zone vaccine programme will eventually get into gear which will help underpin the Euro.
The bank maintains a 12-month EUR/USD forecast of 1.3000 as the dollar loses ground and the Euro posts net gains.
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