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EUR/USD's weekly drop was partly justified by a widening short-term USD-EUR rate differential, according to ING, and the pair remains slightly overvalued in its short-term fair value model. The dollar was expected to stay supported, and the piece noted that commodity currencies were under pressure amid Ukraine-Russia risk and softer oil prices.
Continued dollar support would keep dollar-denominated commodity prices under mild pressure, and softer commodity currencies can shift export competitiveness for feed grains.
think.ing.comFrancesco Pesole, Chris TurnerNov 12, 2021After 533 past bearish macro events, Euro (USD per EUR) moved a median -0.3% over 5 sessions (33% higher; middle half -1.2% to +0.2%), and -0.5% over 20.
After 2,356 past bullish macro events, US Dollar (Broad) moved a median +0.2% over 5 sessions (60% higher; middle half -0.3% to +0.7%), and +0.4% over 20.
Moves of each commodity's benchmark from the last close before the event. Historical reads pool past events of the same kind; they describe what happened, not what will. Not investment advice.
ING analysis attributes the weekly EUR/USD drop to a widening short-term rate differential, supporting the fundamental driver.
