EUR/USD to extend its slide toward 1.0350 on a break below 1.05 – ING

EUR/USD remains very soft. Economists at ING expect high volatility again this week, with a break under 1.05 opening up the 1.0350 mark.

ECB concern against the weak euro offers little help

“EUR/USD has derived little or no support from European Central Bank comments in effect that any further euro weakness is undesirable. And equally, ECB remarks that it could hike three times this year has had little effect on EUR/USD – faced with a 300bp tightening cycle from the Fed.”

“Expect EUR/USD volatility to stay high and a break below 1.0500 could easily be seen this week towards the next major support at 1.0350.”

“Asian FX intervention to support local currencies may also be depressing EUR/USD – as reserve managers reduce euro holdings in reserves to rebalance portfolios after dollar intervention in Asia.