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Euro/dollar enjoyed some stabilization after the big falls. Was the fall exaggerated or is it  set to continue?

The team at ING explain why the fall is justified and set new targets for the each of the following quarters:

Here is their view, courtesy of eFXnews:

EUR/USD is currently suffering a discrete adjustment on the larger-than-expected QE, notes ING.

“We see the cross’s collapse over the past days as justified. While the full scale of the QE is being priced in, what does not appear to be priced in is the Fed’s tightening cycle, the subsequent widening of the US-EZ rate spread and what it means for EUR/USD,” ING argues.

We expect the macro factors to further depress EUR/USD over the next two years and to bring it to parity already this year,” ING projects.

EURUSD to reach parity at the end of 2015 ING forecasts for justified fall of eurodollar looking forward

“EUR/USD at parity by the end of this year and at 0.90 in 2016 undoubtedly points towards a material undervaluation. Yet, as the case of JPY showed, extreme misalignments tend to persist for some time and are not necessarily rare,” ING adds.

In line with thi view, ING now tragets EUR/USD at 1.10 in 1Q15, 1.05 in 2Q15 , 1.03 in 3Q15 and parity in 4Q15. ING is also targeting EUR/USD 0.90 by the end of 2016.

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