EUR/USD lost some ground overnight and is lagging other G10 currencies this week, ING's FX analyst Francesco Pesole notes.

Some modest upside risks for the USD

"Markets are instead favoring a rotation to China proxies AUD and NZD (the former also helped by hot inflation overnight), and the yen, which benefited from some verbal intervention. It appears to us as another signal that markets are becoming more focused on domestic events and relative value in FX: clearly, some good activity surveys out of Germany in the past few days aren’t enough to prop up the euro."

"The consensus view is that tomorrow’s ECB meeting will be a non-event: here’s why we agree. The implications for EUR/USD are likely to be limited, and today’s FOMC should be the only input – if anything – for direction in the pair."

"We see some modest upside risks for the USD. That may not be enough to take EUR/USD sustainably below 1.160, though, and the short-term outlook for the pair remains neutral in our view – at least until US jobs data is published."