EUR/USD: there's a greater chance that the pair falls below 1.10 than goes above 1.18 (ING)

In a note published today, Chris Turner, Head of EMEA Strategy at ING bank, believes that the euro could drop further:

"Near 1.13, the EUR/USD seems cheap. However, with respect to foreign currency hedging transactions, European companies have a longer-term vision.

European companies, most of which cover their (expected) operations in dollars two years in advance, could be led to think that the euro is not really that cheap, especially when compared with the range 1.08-1.18 that prevailed over the 2015-2017 period.

As a result, companies could expect a larger decline in the euro before hedging against currency risk.

The mid-term elections in the United States will also have a major influence on the dollar in 2019. But on the euro's side, the context doesn't seem encouraging right now, and we believe that it is more likely that the EUR/USD goes below 1.10 than above 1.18."