EUR/USD Hits 1.1540 as Fed Hike Looms

The EUR/USD exchange rate has slipped to 1.1540, leaving ING's short-term target of 1.150 within reach. The bank's Francesco Pesole warns that a 'risk-off, hawkish hike by the Fed tomorrow could easily take the pair to our 1.150 short-term target.'

ING sees scope for further decline if Wednesday's Federal Reserve decision reinforces pressures on the Euro. Its models put EUR/USD near fair value, with a slight bias towards undervaluation.

The bank notes that equities and short-term interest rates currently exert a strong influence on the market. A cautious message from the Fed could limit Dollar gains, even if policymakers raise rates.