ING’s Francesco Pesole continues to hold a bearish view on the EUR/USD currency pair, citing persistent downside risks for the euro against the US dollar. Pesole notes that market participants have become less responsive to positive headlines from the Middle East, raising the threshold for any significant euro recovery based on geopolitical developments [1]. Key technical levels are highlighted, with 1.1570 identified as the next support to watch, following the early March move when EUR/USD dropped below 1.160 and subsequently gapped lower after breaching 1.1570 at the onset of the conflict [1].
While market positioning in EUR/USD is now described as 'far more balanced,' reducing the likelihood of abrupt technical sell-offs, the broader macroeconomic environment has become less favorable for the euro. A significant factor is the widening of the two-year EUR:USD swap spread, which has moved back to around -100 basis points from a peak of -65 basis points in early April [1]. This shift reflects rising US dollar rates, which are undermining overall risk sentiment and reversing the rate differential tightening that had previously supported the euro during the energy crisis [1].
No specific market reactions or analyst forecasts for future price targets are provided beyond the emphasis on downside risks and the importance of the 1.1570 support level [1].
CONCLUSION
ING’s analysis underscores a bearish outlook for EUR/USD, driven by a less supportive macro backdrop and widening rate differentials in favor of the US dollar. Key technical support at 1.1570 remains in focus, with market positioning now more balanced but downside risks persisting. The euro’s prospects appear challenged as rising USD rates continue to weigh on sentiment.