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17 Jan 2025

EUR: Risk premium here to stay – ING

EUR/USD appears to have found a short-term anchor at the 1.0300 handle., ING's FX analyst Francesco Pesole notes.

Expect EUR/USD stability around 1.0300

"That is a level that embeds a 2.5-3% risk premium (i.e. undervaluation), which we suspect will not be materially trimmed until more clarity on Trump’s protectionism policy emerges. That said, that stretched valuation and the latest speculative net short EUR/USD positioning at 11% of open interest (CFTC data) makes us lean against another big leg lower in the pair. That, in fact, may require some big USD-positive headlines from Trump on Monday."

"There has been no shift to a less dovish tone by the European Central Bank from the already dovish December meeting (the minutes were released yesterday), even after a tick higher in inflation; and we can expect monetary policy to remain a net negative factor for the euro at least in the coming weeks. We expect EUR/USD stability around 1.0300 today."

Jan 17, 2025

Eurozone Harmonized Index of Consumer Prices (YoY) in line with expectations (2.4%) in December

Eurozone Harmonized Index of Consumer Prices (YoY) in line with expectations (2.4%) in December
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Jan 17, 2025

GBP/USD: Weakness in GBP stabilizes – UOB Group

The Pound Sterling (GBP) is expected to continue to trade in a range, probably between 1.2190 and 1.2280. In the longer run, weakness in GBP has stabilized; it is likely to trade in a range between 1.2130 and 1.2390, UOB Group's FX analysts Quek Ser Leang and Peter Chia note.
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