ING’s Chris Turner notes EUR/USD remains sluggish despite progress toward a US–Iran agreement that could reopen the Strait of Hormuz and despite hawkish ECB commentary from Philip Lane and Isabel Schnabel. He argues that a stronger Fed tightening narrative should dominate in coming weeks, limiting EUR/USD upside and preventing sustained gains above the 1.1650/60 region.

Euro seen struggling to extend gains

"EUR/USD remains sluggish despite the world seemingly being days away from the US and Iran signing a Memorandum of Understanding to extend the ceasefire and reopen the Strait of Hormuz."

"Notably, the euro failed to get much of a lift yesterday from ECB speakers Philip Lane and Isabel Schnabel, firming up views for a 25bp rate hike on 11 June."

"We think the hawkish Fed story will be the more dominant theme over the next few weeks and struggle to see EUR/USD sustaining gains over the 1.1650/60 area in the current environment."

"The eurozone data calendar is exceptionally light today."

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