EUR/USD has breached the 1.0850 level, prompting economists at ING to analyze the Euro’s outlook.

The downside for EUR/USD appears open towards the 1.0790/1.0800 area, while 1.0875/1.0900 is identified as stronger resistance. There are indications that EUR/USD could potentially reach the 1.0715/25 levels next week, presenting a possible scenario.

Surprisingly, EUR/CHF has not retraced significantly despite recent gains. ING notes that their earlier projection for EUR/CHF to reach 0.9500/0.9600 is based on expectations of higher Euro market interest rates. If their assumption holds, with the European Central Bank (ECB) not cutting rates until June and only by 75 basis points this year (compared to the currently priced 140 bps), EUR/CHF could still experience upward movement.

In other developments, EUR/GBP is approaching a critical support level at 0.8500. However, ING suggests that a break below this support is highly unlikely before the upcoming Bank of England meeting scheduled for next Thursday.