Discussion about EUR/USD at 1.20 now open - ING

Published 22/04/2025, 11:18
Updated 22/04/2025, 14:30
© Reuters.

Investing.com - The recent weakness of the U.S. dollar has seen the EUR/USD pair push through the 1.150 level, bringing the 1.20 level into discussion.

At 06:15 ET (10:15 GMT), EUR/USD traded 0.1% lower at 1.1500, but has traded 1.9% higher over the course of the last week, and up 6% this month.

“Picking a top in the pair has proven a frustrating exercise, and Trump’s attack on the Fed is likely extending the confidence crisis on the dollar,” said analysts at ING, in a note. “Now, there isn’t any other key resistance until 1.20.”

It is evident that the euro’s fundamental impact on another significant EUR/USD rally would be minimal, as it would primarily benefit from liquidity-seeking flows departing USD assets due to its reserve value. 

In other words, a move to 1.20 would be driven entirely by USD factors, ING added.

“Our latest forecasts are significantly more conservative on EUR/USD, as we see 1.13 as a more likely value for the end of this quarter. Nevertheless, we have often admitted ample room for short-term volatility, and the risks remain markedly skewed to further deviations on the upside for EUR/USD. If the Fed caves to Trump’s pressure and cuts rates, the damage to the dollar might be enough to take EUR/USD to 1.20,” ING said.

The bank sees that more as the top of the dollar’s confidence crisis rather than a new normal for the pair. After all, the euro retains the negatives of a dovish ECB, with the central bank likely to cut twice more this year, and ING isn’t a subscriber to the view that the dollar has irremediably lost its reserve value.  

“For now, our base case is that the EUR/USD rally will fall short of 1.20 and the short-term balance may sit around 1.14-1.15 even accounting for a sticky risk premium on the dollar,” said the Dutch bank.

 

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