ING Monthly: Weathering the shocks
At a Glance
Lead — The desk views the recent adjustments made by ING as indicative of a stronger dollar outlook, extending the bullish sentiment for USD/JPY and a shift in EUR/USD forecasts. Per the full note from ING, revisions include a hawkish Fed outlook driving an increase in year-end USD/JPY targets to 160 from 158, while EUR/USD targets have been reduced to 1.16 from 1.18. This recalibration reflects the Fed's probable rotation towards a more aggressive monetary stance despite slower job creation and inflation dynamics. With the current spot at 1.1446 for EUR/USD and 161.2860 for USD/JPY, traders should remain alert to market response as these forecasts diverge from general market sentiment.
Key Takeaways
- 01ING’s revisions suggest a stronger USD outlook, especially for USD/JPY.
- 02EUR/USD targets have been revised down as a reflection of diverging monetary policy.
- 03Current market positioning reflects broader Fed expectations despite mixed economic indicators.
- 04Watch for further updates as economic data unfolds in the upcoming months.
Full Analysis
What the desk is arguing
The desk interprets ING's monthly report as a clear signal of dollar strength against major currencies, particularly EUR/USD and USD/JPY. According to the research, the robust dollar outlook aligns with market expectations for continued Fed rate hikes, with a potential September elevation on the table. This is underscored by the revised year-end projection for USD/JPY, which marks a notable pivot from previous forecasts.
Additionally, maintaining that the U.S. economy has shown resilience amid external shocks emphasizes the ongoing divergence between monetary policies in the U.S. and Eurozone. This is evidenced by the more hawkish Fed compared to a tightening cycle that might culminate in the last hike for the European Central Bank, as outlined in the commentary.
Where it sits in our coverage
Our internal target for EUR/USD is currently set at 1.1700, with a consensus range spanning from a low of 1.1200 to a high of 1.2000. Specific targets from other firms include: - RBC: Dec-26 target at 1.2000 - Morgan Stanley: Dec-26 target at 1.2150 - ING: keeping targets at 1.1700 for Dec-26
This interpretation contrasts slightly with ING's outlook, which has lowered their target for EUR/USD to 1.16 for the same period. Notably, our estimates are clustered towards the higher end of the current market predictions.
How other firms see it
Several firms are aligned with a bullish view on the dollar, notably RBC with targets affirming dollar strength against multiple currencies, emphasizing the divergence in central bank policies. On the contrary, firms like Stanchart project a weaker EUR/USD alongside their more conservative dollar forecasts.
Related pairs to monitor include USD/JPY, which reflects broader Fed sentiment, and the correlations to the anticipated ECB policy shifts, which may create added volatility in the cross.
Market Implications
Traders should focus on potential adjustments as USD/JPY edges closer to the newly revised target of 160, which could signal further strength. A break above recent levels near 161.29 could catalyze buying interest, particularly if the Fed shores up expectations with hawkish indications ahead of upcoming meetings.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
UOB | Bearish | 1.1140 |
ABN AMRO | Bullish | 1.1500 |
Bank of America | Bullish | 1.1500 |
From the original
Reports Report ING Monthly: Weathering the shocks Published 11:53 The most striking thing about this summer isn’t the string of unprecedented shocks. It’s that the global economy has barely flinched Carsten Brzeski Download PDF Executive summary Energy: We have revise
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The desk posits that despite significant geopolitical and economic shocks this summer, the global economy appears resilient, albeit possibly mispriced. Per the full note, the emerging risk is a bond market sell-off linked to rising rates, which could weigh heavily on growth. Current leading indicators suggest continued, albeit subdued, growth ahead. With our internal targets for EUR/USD at 1.1700 by Mar-26 and USD/JPY at 155.0000, the market is largely pricing in the dislocation from current geopolitical tensions and central bank pivots. There are no high-impact calendar events ahead that may disrupt this outlook.