EUR/USD to hover around the 1.11/1.12 area amig high inflation readings – ING

EUR/USD clings to modest daily gains above 1.1150 after managing to post impressive gains in the previous two days. In the opinion of economists at ING, the pair may hold on to gains after strong eurozone inflation readings.

Holding on to gains

“The news of US oil possibly being released is a positive for the euro, given the eurozone’s dependence on energy exports, but it is still unlikely to drive crude prices sustainably lower, keeping the prospect of material recovery in the battered eurozone’s terms of trade as quite remote. We continue to see the terms of trade shock as likely to keep EUR/USD upside limited in the medium-term.”

“We think that high eurozone inflation readings and the benign external environment – albeit still highly reliant on Russia-Ukraine peace negotiations – can keep EUR/USD in the 1.11/1.12 area for today.”