EUR/USD gains as hedging costs drop sharply – ING

FXStreet Insights Team FXStreet

EUR/USD advanced in Asia as sharply lower USD hedging costs for eurozone investors—now down to 1.85% from 2.40%—boosted demand for the single currency alongside improved terms of trade. With eurozone investors holding over €2.3tr in U.S. debt, even modest hedge-ratio increases could generate meaningful dollar selling, supporting the pair's push toward the 1.1655–1.17 resistance zone, ING's FX analyst Chris Turner notes.

Eurozone terms of trade hit year high on softer energy

"EUR/USD found a bid in Asia on the Hassett news. In the background, however, there is some more supporting evidence for the rally. Softer energy prices are sending the eurozone's terms of trade to the highest levels of the year and supporting the eurozone's external accounts. And perhaps more importantly, hedging costs for eurozone residents wanting to insure against FX losses on US assets have now dropped to 1.85% p.a. when looking at the three-month forwards. These had been at 2.40% in July."

"While a 55bp drop in hedging costs might not seem like a lot, it is a big deal for bond investors who typically deal in more conservative returns. And for reference, at the end of the second quarter this year, eurozone investors held about €800bn of US sovereign debt and €1.5tr of other US debt securities. Therefore, some modest increase in hedge ratios can lead to quite a supply of dollars. Over the next couple of weeks, we should probably look out for buy-side dollar selling at key FX fixes."

"In Europe, the focus remains very much on the Ukraine peace talks. Unsurprisingly, there seems to have been little progress in US-Russian talks yesterday. The focus today could be on the European Commission's proposal to use frozen Russian assets to fund Ukraine. Political analysts widely feel that this loan is essential to fund Ukraine's ability to defend itself after the second quarter of next year. If EUR/USD can nudge through the 1.1655/70 area – perhaps with the help of some softer US data – we could see a decent move through 1.17. We retain a year-end target of 1.18."

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD appears well offered near 1.3160

GBP/USD builds on Tuesday’s losses, although it now manages to pick up some pace and bounce off earlier multi-month troughs near 1.3140. The Greenback’s solid performance and continued political turmoil in the UK are keeping Cable under persistent pressure, with little sign of a meaningful recovery.

EUR/USD softens to near 1.1350 as Fed hike bets rise ahead of PCE inflation data

The EUR/USD pair declines to around 1.1355 during the early Asian trading hours on Thursday. The Euro weakens to its lowest level since June 2025 against the US Dollar as traders increase their bets on US interest rate hikes later this year. The US May Personal Consumption Expenditures inflation data will be the highlight on Thursday.

Gold off YTD lows, still struggles around $4,000 on hawkish Fed bets

Gold is off year-to-date lows, still struggling around $4,000 in the Asian session on Thursday as bears pause following the overnight slump to the lowest level since November 2025. Despite easing inflationary concerns amid falling oil prices, elevated Fed rate-hike bets help the US Dollar preserve its recent strong gains to the highest level since May 2025, weighing on non-yielding bullion.

Crypto market sheds over 50% of its value amid Bitcoin's brief decline below $60K

The crypto market has erased more than half of its value since reaching an all-time high in late 2025. The decline underscores the severity of the recent bear market and lack of a fresh catalyst to revive investor interest, according to a Wednesday X post by The Kobeissi Letter. The total crypto market cap peaked at a record $4.3 trillion on October 6, 2025.

5.90% to 5.45%: Why the Pound ignored the bond market’s relief rally

Keir Starmer resigned on Monday, and the Pound barely moved. That near-silence is the tell. Sterling's real driver these past four months has not been the prime minister, nor the left-leaning frontrunner lining up to replace him, but the long end of the gilt curve, which answers to a force no British politician controls.

Regime change: Inside Kevin Warsh's first move to make the Fed unreadable on purpose

The rate did not move. That was the least interesting thing about Kevin Warsh's first meeting in charge of the Fed. The FOMC held its benchmark at 3.50%-3.75% for the fourth straight meeting, exactly as priced, and then the new chair used his first press conference to dismantle the machinery the market has leaned on for a decade.