EUR: Cheap below 1.180 – ING

EUR/USD was trading back below 1.180 after touching 1.1920 immediately following the FOMC announcement. Some positioning readjustments are probably contributing to the sharp EUR/USD drop during and after Powell’s press conference, ING's FX analyst Francesco Pesole notes.

EUR/USD to return to 1.185 in the coming days

"Our model indicates that the hawkish repricing at the front end of the USD curve, relative to the EUR one, still places the short-term fair value at 1.185. So further drops to 1.170 would need to be justified by stronger US data and, by extension, higher front-end USD rates, which is not our baseline considering the clear negative momentum for US jobs news."

"We expect a return to 1.185 in EUR/USD over the coming days, and continue to target 1.20 in the fourth quarter."