European natural gas prices have fallen below EUR 30/MWh for the first time since May, boosting Europe’s terms of trade and offering relief to its struggling manufacturing sector, ING's FX analyst Chris Turner notes.

EUR/USD still stuck near 1.1500 despite supportive fundamentals

"Headlines this morning show European natural gas dropping below EUR30/mwh for the first time since May 2024 This will be very welcome news for the European manufacturing industry. This comes at a time when the manufacturing sector continues to weigh on the broader composite business PMIs in the region, and as Germany considers energy subsidies. The fall in energy prices has led to the euro's terms of trade index rising to its highest level of the year – a clearly positive development for the euro."

"We are a little surprised to see EUR/USD still languishing not far from 1.1500 – but perhaps investors are more comfortable expressing euro-positive views through EUR/CHF than EUR/USD. Still, we think events this week could firm up the floor in EUR/USD at 1.1500. If there are any further positive developments on the Ukraine peace plan, EUR/CHF could easily correct up to 0.9400/9450 in thinning year-end markets."