EUR/USD staged a rebound and tried to regain parity after falling to its weakest level in almost 20 years on Tuesday, around 0.99. Nevertheless, the pair has retraced to 0.9950 and could drop to 0.98, ING economists report.
Bearish bias persists
“While an improvement in eurozone growth sentiment may trigger an asymmetric upside reaction in EUR/USD, a prolonged short-term undervaluation is possible if gas prices remain elevated and the threat of supply shortages materializes.” .”
“Yesterday’s PMIs did little more than confirm market concerns about the toxic combination of high energy prices and slowing global demand, and a complete reversal of yesterday’s moves could come today.”
“A drop to 0.9800 is more likely than a sustained recovery above parity in the short term“.
Source: Fx Street
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