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EUR/USD is going nowhere fast. While it recovered from the lows thanks to the issues with the US tax plan, it is hard to see it taking a new direction. What’s next? Here is the view from ING:

Here is their view, courtesy of eFXnews:

ING FX Strategy Research discusses the USD outlook in light of the recent development on the US tax reform front.

“Despite a lot of fresh (US) inputs, the dollar hasn’t gone very far. In fact, one-month EUR/USD traded volatility is crashing below 6% and favoring more range trading in the near-term. Going forward expect the US tax plan to remain in focus, including potential scoring by the CBO and GOP mark-ups this week.

Were the tax plan to make progress, e.g. passed in the House by Nov 16th, we don’t think the repatriation story would be key to the dollar.  Instead, some elements of the border tax proposal – disguised as ‘excise duties’ in Brady tax bill – could bring back into focus the economic arguments for a one-off appreciation adjustment in the US dollar,” ING notes.

In line with this view,  ING is neutral on EUR/USD around current level, expecting the pair downside to be limited to 1.1550 before resuming strength towards 1.18 in 1-month.

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