It's been quite an attractive story to tell that if German fiscal expansion caused the EUR/USD exchange rate to rise significantly in March (from 1.04 to 1.09), then a weakened Friedrich Merz should see EUR/USD fall a few figures back, ING's FX analyst Chris Turner notes.
"His failure in the first confirmation round in German parliament yesterday did briefly send EUR/USD back to 1.1310, but EUR/USD is proving quite resilient. There's also an argument that China's monetary stimulus announced overnight is a EUR/USD positive as it helps global demand trends."
"As for EUR/USD, it held important support at 1.1260 last week. The market remains nervous over US policy, and dollar price action is quite poor. We have a slight bias that it can push through 1.1380 to 1.1420 in quiet markets."