EUR: German ZEW should continue upbeat tone – ING
EUR/USD is consolidating as investors price up the next trade move, ING's FX analyst Chris Turner notes.
EUR/USD is sitting above modest support at 1.1650
"So far, the bloc has refused to retaliate and hopes to negotiate its way out of the 30% tariffs imposed by President Trump at the weekend. Failure to get that rate negotiated lower (prior expectations were that it could be negotiated down to 10%) would look negative for the region. But clearly it's going to be a noisy couple of weeks, and one can't rule out the threat of even higher US tariffs as Washington tries to get the deal over the line."
"For today, US CPI will be the main driver of EUR/USD. But before that, we'll get an update on German ZEW investor expectations. These should come in on the strong side as investors focus on the medium-term benefits of German fiscal expansion. On the subject of fiscal policy, France is still dealing with large budget deficits and Prime Minister Francois Bayrou is due to unveil his fiscal consolidation plan today, including EUR40bn of spending cuts. Let's keep an eye on French government bonds, where failure to deliver spending cuts seems to take its toll on local fixed income and FX."
"EUR/USD is sitting above modest support at 1.1650. The FX options market prices a 59 pip EUR/USD range today. Let's see whether June US CPI can add a little momentum to this bull market correction."
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FXStreet Insights Team
FXStreet
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