The Euro Looks Cheaper, but That May Not Stop the Slide - EUR/USD Forecast

EUR/USD: Near-term bias remains bearish, with a possible but unconfirmed valuation cushion. The pair’s move below ING’s 1.140–1.142 reference area weakens the case that “cheap” valuation alone will halt the decline; the article also notes the rate remained close to its September low. That area is a model-based reference, not a confirmed floor, and changing interest-rate expectations could shift the valuation band.

The key driver is the relative US–eurozone outlook. Eurozone composite PMI improved, which could support the euro if it lifts expectations for ECB tightening. But US PMI also accelerated and was stronger, sustaining the dollar advantage. If markets continue to price US rates more firmly than euro-area rates, EUR/USD could remain under pressure despite the pair looking inexpensive.

ING’s 1.160 year-end forecast therefore depends on a reversal in dollar momentum; from the article’s cited 1.1387 level, that implies a roughly 1.9% recovery. A sustained dollar retreat or a relative hawkish shift in ECB expectations could help that scenario. Conversely, persistent US growth strength, renewed Fed-tightening expectations, or weaker euro-area data would undermine it.

What to watch:

incoming US and eurozone activity and inflation data, changes in Fed-versus-ECB rate pricing, and whether EUR/USD stabilizes after the break below the cited band. The report supports a cautious bearish near-term interpretation, but not a guaranteed continuation.