ING’s Chris Turner notes that EUR/USD has fully retraced its March losses, helped by fading expectations for an April ECB hike while a June hike remains priced. The ECB is seen keeping a hike option open as it assesses scenarios. ING is cautious on chasing EUR/USD higher around 1.18 and sees scope for a pullback toward 1.1700 on adverse news.

Euro strength may face near-term pullback

"EUR/USD price action has been impressive in that it has retraced the entirety of its losses in March. The good news for EUR/USD bulls is that the pricing of an April ECB hike has quietly evaporated without weighing too heavily on the euro. A June hike remains fully priced and we suspect the ECB will need to deliver this for EUR/USD to stay supported this summer."

"Today, we will receive the minutes of the 19 March ECB meeting and then hear from a host of ECB speakers in Washington. The prevailing view at present is that the ECB sees the current situation somewhere between its baseline and adverse scenario, meaning that it has to keep the possibility of a rate hike on the table."

"We have been surprised by how quickly EUR/USD has made it all the way back to 1.18. We are not fans of chasing it higher from here and feel it could easily correct back to 1.1700 on any adverse news."

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