On Tuesday, the EUR/USD currency pair briefly breached the 1.0850 level before settling at relatively unchanged levels by day’s end. Economists at ING provide insights into the pair’s outlook amidst recent developments.
Despite France making headlines with its report of a 2023 deficit reaching 5.5% of GDP, notably higher than the previous year’s 4.8% and surpassing the government’s target of 4.9%, the Euro has managed to remain resilient. The lack of significant movement in OAT spreads suggests the Euro has been shielded from fiscal concerns. However, attention may shift back to these issues as France prepares for its September budget, potentially impacting eurozone bonds. Nonetheless, ING analysts anticipate the European Central Bank‘s ongoing monetary easing measures to create a supportive environment for eurozone bonds.
Assessing the current week, ING does not foresee any major catalysts that could drive significant movements in the EUR/USD pair unless there are surprises in the US core Personal Consumption Expenditures (PCE) data. With consensus expectations clustered at 0.3% month-on-month, ING anticipates the pair to stabilize around the 1.0850 mark in the near term.
