EUR/USD is currently trading about 2% below its fair value, according to ING FX strategist Francesco Pesole, who says the recent decline has gone beyond what rate differentials and other fundamentals justify.
Short-term view: Upside risks dominate
Pesole notes that while the pair may briefly dip below 1.1500, such levels are unlikely to hold unless the market sees either:
- a significant hawkish shift driven by stronger US data, or
- euro-negative developments.
Given the current backdrop, he believes risks remain tilted upward in the near term.
Year-end outlook unchanged
ING still projects EUR/USD at 1.18 by year-end. However, Pesole warns that sustained trading above 1.1600–1.1650 may be difficult until mid-December.
