ING’s FX workforce maintains a bearish Greenback baseline for 2026, anticipating decrease front-end US charges and softer US development within the second half of the 12 months to assist EUR/USD. With Eurozone information seen bettering relative to the US and dangers targeting the US facet, the financial institution initiatives EUR/USD to grind larger into year-end.
Fed cuts and Eurozone resilience assist upside
“Our baseline view for the greenback is a bearish one for the rest of 2026. USD hedging ought to sustain at tempo due to decrease front-end charges (we count on two Fed cuts this 12 months), and a slowdown in US development within the second half of the 12 months will, in our view, coincide with upbeat eurozone figures, lifting EUR/USD.”
“We don’t count on this 12 months’s greenback decline to match 2025’s in magnitude, however the focus of dangers within the US – from fairness valuations to fiscal and political dangers forward of the midterm elections – means the dangers stay on the draw back for the buck. We goal 1.22 in EUR/USD by year-end.”
“We agreed with the report’s findings that top greenback hedging prices had stored investor greenback hedge ratios low, though it was notable – taking a look at EUR/USD hedging ranges anyway – that traders have been comparatively underhedged early final 12 months.”
“Our baseline assumes that the cyclical issue of a 50bp Fed minimize versus unchanged ECB charges will see greenback hedging prices slim additional and must be in keeping with greenback hedge ratios being raised to round 74% by the tip of the 12 months.”
“It’s not that the US outlook is deteriorating. It’s simply that, for the primary time in a very long time, there are some extra enticing alternatives abroad. This theme is in keeping with a benign greenback decline.”
(This text was created with the assistance of an Synthetic Intelligence device and reviewed by an editor.)
