ING’s Chris Turner writes that EUR/USD was pressured in Asia by higher Oil after failed peace talks, but notes the pair is holding above 1.1600. He highlights Hungary’s pro‑EU election outcome as supportive for the Euro and sees 1.1700 as a comfortable near-term level, with June European Central Bank rate hike expectations remaining intact.

Pro‑EU Hungary and ECB expectations

Perhaps the reasons that energy prices are not higher and that equity markets are not lower today are that: a) at least the Iranian delegation showed up in Islamabad, and b) the alternative of a renewed destruction of energy infrastructure in the region – delivering lasting damage – has so far been avoided.

"EUR/USD was hit in Asia as oil prices spiked after failed peace talks. As above, the fact that the combatants have not immediately resumed destroying energy infrastructure in the region suggests it could have been worse."

"That is why EUR/USD is not trading closer to 1.1600. Also limiting EUR/USD downside today are probably events in Hungary. The convincing pro-EU turn among the Hungarian electorate will be very welcome news for Brussels and may prompt a pause for thought among populist Euro-sceptic political parties across Europe."

"Barring another major leg higher in energy prices today, we think something like 1.1700 looks a comfortable level for EUR/USD in the near term. The data calendar is light, but Luis de Guindos will be the first of many European Central Bank speakers this week."

"It looks too early for the ECB to completely rule out a rate hike in April (which looks unlikely), but we expect the pricing of a June ECB rate hike to hold up. 22bp is currently priced for that meeting."

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