EUR/USD Seen Undervalued in Short-Term, ING Strategist Says

ING FX Strategist Francesco Pesole says that EUR/USD appears undervalued in the short-term, with fair value estimated around 1.160-1.1650 based on swap spreads.

The strategist maintains a positive bias on EUR/USD but doubts a near-term break above 1.160 without a dovish surprise from the Federal Reserve.

Pesole notes that the models suggest EUR/USD's short-term fair value sits in the 1.160-1.1650 area, primarily due to the c.10bp tightening in two-year swap rate spreads.