EUR: Eyes on 1.180? – ING
|EUR/USD rose again yesterday, but primarily on the back of US Dollar (USD) weakness, as markets had largely priced in that French PM Lecornu would survive the no-confidence motions, ING's FX analyst Francesco Pesole notes.
USD remains in a fragile spot
"Lecornu effectively traded political stability for more budgetary difficulties by freezing the pensions reform. This – aside from very few guarantees on the durability of this new government – is keeping the 10Y OAT-Bund spread above 75bp, some 10bp wider than mid-August."
"That is, however, enough for the Euro to price out a good portion of the French risk premium, and barring a new government collapse before year-end, this should allow EUR/USD to refocus on canonical market drivers (rates and equities). USD remains in a fragile spot, and a break above 1.750 is surely possible, with 1.180 starting to look very realistic again. The upcoming meeting between Trump and Putin could also attract EUR-positive speculation on a Ukraine truce."
"Our macro team has published a preview of the Dutch election. We don’t currently see it as a major risk event for the euro: a fragmented parliament is the most likely outcome, and most parties are unwilling to form a government with Geert Wilders’ Eurosceptic PVV party, which is leading in the polls."
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.