EUR/USD: Heavy tone with downside risks – ING
ING’s Chris Turner says rising short-dated Eurozone yields on higher Oil and pass-through of input costs are not clearly supportive for EUR/USD. He argues the European Central Bank must get ahead of inflation expectations and that current real rate differentials are unsupportive.

ING’s Chris Turner says rising short-dated Eurozone yields on higher Oil and pass-through of input costs are not clearly supportive for EUR/USD. He argues the European Central Bank must get ahead of inflation expectations and that current real rate differentials are unsupportive. Turner flags German Ifo risks and suggests EUR/USD is likely to move toward 1.1630 near term.

Rising yields fail to lift Euro

"Short-dated yields are on the rise again as oil pushes higher and signs emerge that businesses are able to pass higher input costs on to their customers."

"While the 67% probability attached to a June rate hike looks too low and will probably be corrected over the coming weeks, that may not necessarily help the euro."

"The European Central Bank needs to get ahead of inflation expectations to help the euro, not merely match them."

"And two-year EUR/USD real interest rate differentials are not particularly supportive of EUR/USD right now."

"1.1630 looks to be the direction of travel for EUR/USD today."

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

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