The Trump-Putin meeting and any better clarity on the path ahead in the Ukraine conflict have longer-lasting implications for the Euro (EUR) than for the US Dollar (USD), ING's FX analyst Francesco Pesole notes.

Markets may tread carefully for now

"How EUR/USD, EUR/CHF and EUR/JPY trade on Monday morning will be a good gauge of how markets have digested any headlines from Alaska."

"The deterioration in the eurozone’s terms of trade has impacted the long-term euro fair value, and some conviction that energy prices could come structurally lower from here could make markets more comfortable with the euro trading at levels inconsistent with a relatively unattractive implied rate – e.g. above 1.20."

"But as discussed above, there is a chance that today might be the first step in the direction of de-escalation, and markets may tread carefully for now. The repricing in Fed cut expectations is hindering the chances of another major leg higher. The next US data releases will determine whether a return to 1.180 is feasible in the near future."