EUR/USD bullishness has continued to rise both in spot and via the options markets, with 1-month 25 delta risk reversals (cost of a call minus cost of a put) having moved from -0.2 to +0.3 in the past 10 days. There is still some room before reaching the September 0.7 or April’s 1.3 peaks, but the shift is clear, ING's FX analyst Francesco Pesole notes.

Return below 1.160 is quite possible

"The EUR/USD move has been primarily, but not entirely, driven by the dollar. European currencies are generally in demand, and while NOK, SEK and CHF have been the preferred currencies, the rest of the G10 has underperformed the euro since the start of the week."

"EUR/USD has now entirely erased its undervaluation gap, and we now feel less confident about short-term upside unless US data come in soft. We see some correction risks today, with a return below 1.160 surely possible."