ING forecasts EUR/USD at 1.17 by end-Q3 but sees near-term trading constrained by US yields and Eurozone economic prints.
EUR/USD traded modestly higher after the FOMC meeting but faced resistance from rising long-dated US yields and pressure on growth stocks in the S&P 500. The pair is expected to remain in a 1.14–1.15 range in the near term, driven by upcoming Eurozone GDP and inflation data.
ING projects the Federal Reserve will hold rates in September, supporting a year-end EUR/USD target of 1.17. However, high energy prices and US economic strength could make the Fed’s decision a close call. Eurozone GDP growth is forecast at 0.2% quarter-on-quarter, while July inflation data may influence ECB policy expectations.
Markets have priced in over a 90% chance of an ECB rate hike in September, with short-dated euro rates supported by persistent inflation concerns.