EUR: Buying the dips remains a clear risk – ING

Geopolitical events are causing a temporary dislocation from macro-driven price action in EUR/USD, ING's FX analyst Francesco Pesole notes.

Plenty of ECB speakers to listen to

"Even before very soft US retail sales were published, the German ZEW had come in quite strong, with the 'expectations' index essentially back at pre-'Liberation Day' levels. Although the overbought and overvalued condition of EUR/USD suggests further corrections, the preference to buy on dips due to structural bearish views on the USD may only be put on pause until oil prices absorb the geopolitical shock."

"So while the USD may indeed regain some near-term momentum, we don’t think this will be enough to take EUR/USD sustainably back to the 1.12-1.13 area. Our near-term target remains 1.14 for the pair."

"Today, the eurozone data calendar is light, but there are plenty of ECB speakers. Given the sensitivity of the ECB’s inflation projections to oil price swings, we can probably expect even more cautiousness by the Governing Council in light of recent events. Markets will probably feel little pressure to price back a rate cut earlier than December for now."