EUR/USD may need discovered a short-term anchor at 1.17. Regardless of the post-NFP hawkish repricing within the USD OIS curve, the two-year swap charge hole stays 15-20bp wider than a month in the past. Because of this whereas some USD danger premium stays current at round 1.170, the greenback isn’t as screamingly low-cost because it was in early June, ING’s FX analyst Francesco Pesole notes.
EUR/USD could not drift removed from the 1.16-1.18 space
“The eurozone information calendar isn’t significantly busy this week, and the main target ought to be totally on some ECB audio system. As we speak, we’ll hear from Lane, Guindos and Nagel. Given the return of tariff threats to the EU, the dangers are skewed to some barely extra dovish feedback within the coming days, though, like markets, the Governing Council could tread very rigorously when guessing Trump’s final commerce plan.”
“The US President stated yesterday {that a} letter to the EU outlining the brand new tariff charge was ‘two days off’. We might see the EUR face some strain on the crosses on the announcement, however the conclusions for EUR/USD will not be that straightforwardly unfavourable. Tariffs on the EU would mark an vital escalation that may additionally hurt the greenback, offsetting the hit on the euro.”
“Anyway, the market’s baseline will in all probability stay {that a} EU-US deal ought to be agreed by the 1 August deadline, and EUR/USD could not drift removed from the 1.16-1.18 space until US information shock in both path.”
