EUR: Back to 1.15 – ING

EUR/USD is back above 1.150 as markets priced out a certain degree of geopolitical risk off the pair, ING's FX analyst Francesco Pesole notes.

Developments remain very marginal for EUR/USD

"The situation in the Middle East remains too volatile to make a strong directional call on the pair, but the overarching risk of the US joining the conflict could keep it from aggressively retesting 1.160 in the next few days."

"Eurozone developments remain very marginal for EUR/USD at this stage, with the macro calendar incidentally offering very little input. The EUR/USD two-year swap rate spread has incidentally been quite stable around 165-170bp since the European Central Bank meeting."

"Elsewhere in Europe, markets were taken completely by surprise by Norges Bank’s 25bp rate cut yesterday. We argued last week that the conditions for a cut were ideal, and that holding again was a risky move. However, we had doubts that the central bank would completely wrongfoot market expectations and consensus. We now expect two more cuts by Norges Bank, which does not necessarily prevent further EUR/NOK gradual depreciation."