EUR/USD: Gas risks threaten fair value – ING

ING says EUR/USD’s fair value remains around 1.17 given current assumptions on energy, central bank policy and equities, but warns that higher natural gas prices or additional Fed tightening would push the euro lower. ING’s commodities head flags the natural gas market may be underpricing supply risks in the Persian Gulf; a sizeable gas-price spike would weigh on the euro via worse terms of trade. ING also expects oil moves to drive near-term EUR/USD flows, with risks skewed toward the 1.1630–1.1650 area. Overall, the note signals downside risk for EUR/USD if energy prices re-accelerate or rate expectations change, making energy markets a key near-term market driver.