ING: The EUR - FJElite
Our models suggest EUR/USD's short-term fair value sits in the 1.160-1.1650 area. That’s primarily on the back of the c.lObp tightening in two-year swap rate spreads, which retain a significantly higher beta than other drivers.
That supports our positive bias on EUR/USD, even though we aren’t convinced a break above 1.160 is on the cards in the coming days unless communication from the Fed starts to surprise on the dovish side. For now, EUR/USD bulls like us may be content with strengthening technical support around 1.1500.
In the eurozone, the second release of 2Q GDP will be released today, with no expectations for meaningful changes to the advance 0.4% quarter-on-quarter print.