ING’s Francesco Pesole highlights that EUR/USD has returned to Friday’s levels, with markets prioritizing central bank dynamics over Oil. A wider EUR:USD swap differential contrasts with weaker Eurozone growth and a less dovish Fed, limiting bullish Euro positioning. ING still sees downside risks, with EUR/USD potentially testing below 1.150 on renewed deal concerns, Hormuz delays or further US‑Eurozone data divergence.

Growth and Fed dynamics weigh on Euro

"EUR/USD is back to Friday’s levels."

"The two-year EUR:USD swap rate differential has retained a widening bias since the weekend, and keeps hovering around the pre-war 110-115bp area."

"Fed moves tend to have greater implications for EUR/USD than the ECB’s due to the knock-on effect on global sentiment, and when adding the severely damaged eurozone growth, it’s understandable markets aren’t jumping on bullish bets on the pair just yet."

"We still think some downside risks remain for EUR/USD, which could explore sub-1.150 levels on any fresh concern about the sustainability of this deal, delays in Hormuz reopening, or further data divergence between the US and eurozone."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)