After briefly trading above 1.1800 in late December, EUR/USD is under renewed pressure, with scope for a move toward 1.1640–1.1600 if support at 1.1680 gives way. Near-term risks are shaped by geopolitical developments and US data, while euro support may emerge later in the year as German fiscal stimulus gains traction, ING's FX analyst Chris Turner notes.

Dutch pension reform in focus for EUR Rates

"Having very briefly traded above 1.1800 in late December, EUR/USD is back under pressure again. Depending on events in Venezuela over the next few days, EUR/USD could come lower still. Below 1.1680, we are looking at 1.1640 and possibly 1.1600 too. There is also the release of the US ISM manufacturing data to consider today, which may have an impact."

"Perhaps the hottest topic for European asset markets this week is the Dutch pension reform and whether local pension funds will start paying longer-dated EUR swap rates as they shift from a defined benefit to a defined contribution system. The 10-30 year EUR swap curve steepened a lot in the second half of last year in anticipation of these moves. The question is whether this activity is enough to move the shorter-dated swap rates higher as well – perhaps providing the euro with some support."

"We suspect the first quarter might be a consolidative one for EUR/USD. The best chance of it moving higher may come from the second quarter onwards as German fiscal stimulus starts to take effect."