EUR: Asymmetrical upside risks ahead – ING

EUR/USD is holding near the 1.160 handle ahead of key US data, with the euro’s liquidity helping it avoid a sharp hit from the equity sell-off. So far, losses in G10 FX have been mostly confined to high-beta currencies, notably AUD and NZD, ING's FX analyst Francesco Pesole notes.

Year-end target remains at 1.180

"In our view, upside risks for EUR/USD persist. The pair has recently traded on the cheap side relative to its short-term fair value, but since French political risk faded, it has struggled to maintain an undervaluation greater than 1% for consecutive days. This morning’s model estimate puts the undervaluation at 0.8%, suggesting the upside room is asymmetrically larger than the downside heading into key US releases."

"Our year-end target remains 1.180. While the path higher may not resemble the one-way bullish traffic seen earlier this year, positive December seasonality could help smooth the move."