EUR: Corrective activity continues – ING

Those waiting for better levels to buy EUR/USD could be rewarded for their patience. US-EU trade negotiations look set to get noisier over the coming weeks, and baseline expectations that the EU secures a 10% tariff rate on most goods could be challenged, ING’s FX analyst Chris Turner notes.

EUR/USD may crawl downwards to the 1.1450/1500 area

"At the same time, we are on the lookout for higher energy prices and also a slight tick higher in US rates if US inflation starts to nudge higher. A close under, say, 1.1650 in EUR/USD today could clear a path for a correction to the 1.1450/1500 area, which is our slight preference for this quarter."

"Also today, look out for fresh news of demand for EU issuance. Last week's 7 and 20-year EU issues had 14x and 20x subscription levels for EUR9bn of issuance. And today sees the launch of another EUR5bn of 2028, 2034 and 2054 bonds. Tomorrow is the settlement day for last week's EU issues, meaning that EUR/USD could see some demand even if US CPI came in firm."

"The data and European Central Bank speaker calendar are pretty quiet in the eurozone this week. But our house view of a 25bp ECB rate cut in September is only 40% priced by the market – a factor which could weigh on the euro over coming months."