EUR/USD to plunge towards 1.1220 on Russia invading Ukraine or spikes in gas prices – ING

The euro has held up reasonably well this week. Still, the EUR/USD pair could dive below 1.1280 towards 1.1220 on Russian invasion or higher natural gas prices, economists at ING report.

In harm's way

“Similar to the Fed, events in Ukraine have knocked about 10bp off the pricing of the terminal European Central Bank (ECB) rate (roughly in the two-year horizon), but we suspect expectations of the Fed cycle will bounce back quicker.”

“EUR/USD could break below 1.1280 to the 1.1220 area – or lower – should Russian lines move further West in Ukraine or natural gas prices spike further.”