EUR/USD: A further correction into the 1.05-1.06 region is on the cards – ING

EUR/USD continues to fluctuate in a narrow range at around 1.0400. The pair could reach 1.05-1.06 next week, according to economists at ING.

The big Dollar story is dominating

“Despite the looming eurozone recession, ECB hawks such as Isabel Schnabel suggest it may be premature to scale back rate increases. Currently, the market prices 61 bps of hikes on 15 December (we expect 50 bps). Clearly, the 50 bps versus 75 bps debate will continue to run.”

“For EUR/USD, it still looks like the big Dollar story is dominating. We cannot rule out a further correction into the 1.05-1.06 region but would see these as the best levels before year-end. These levels could be seen next week should Fed speakers or November US jobs data prove the catalyst.”