According to ING economists, the EUR/USD will likely gain further upside if the US Core CPI reading turns out to be 0.4%. They also added that the EUR/USD pair would be driven by the Fed policy decision, the core inflation.
In fact, it would be totally justifiable to say that investors must look towards the USA rather than the Eurozone. After all, there are no high-value data coming from Europe, but the economic releases from the US side are really important.
With the inflation data the Fed meeting due within the next few days, it is important to wait for their release. But ING believes that the data will favor the EURO currency and thus will lead to more upside in the EUR/USD.
23% Chance Of A Rate Hike
When asked about the possibility of a rate hike by the Fed, they said there's a 23% chance of that happening tomorrow. At the end of the day, even a chance of 23% can be completely discounted. Maybe that's why we are seeing indecision in the USD-based FX pairs.
The ING economists are of firm belief that there's a 0% chance of any rate from the Fed. In that case, an upside in the EUR/USD, USD/JPY, and other pairs will likely happen.
But despite these forecasts, they also issued caution since the upcoming events are of high importance. It is normal for pairs like EUR/USD to show indecision at the exact time of the release. From making a big move upwards to reversing all of that in the next meeting, anything can happen in the EUR/USD.
In our opinion, the exact direction of EUR/USD will only become clear 1-2 hours after the US Fed decision and the inflation data. Anything before that will just be the market players trying to adjust their portfolio ahead of the key events.