EUR/USD Faces Downside Risk and May Test 1.10—ING

Francesco Pesole from ING pointed out that the divergence in policy wording between the Federal Reserve and the European Central Bank is putting pressure on the euro against the US dollar. The widening two-year swap spread is favorable for the US dollar, and there is a risk that EUR/USD may test the 1.100 level in the coming days. ING expects this level to offer strong support and believes that for there to be a decisive break below 1.100, the market would likely need to price in a 50 basis point rate hike by the Federal Reserve in December.