ING's Chris Turner reports that futures market data from Chicago indicates asset managers and leveraged funds have been increasing their exposure to the Euro, while speculators remain underweight, which supports the potential for Euro gains against the US Dollar [1]. Although the amounts of Euro contracts bought are not particularly large and the data predates last Wednesday's jump in EUR/USD, Turner emphasizes that the positioning still favors Euro upside [1].
Turner also highlights the recovery in German IFO and Eurozone PMIs, noting that these indicators are expected to continue their rebound following sharp declines in March and April [1]. The August German IFO release is scheduled for this week and is anticipated to show further improvement [1].
ING does not foresee a sharp drop in EUR/USD below the 1.1660/70 support level unless risk assets experience significant losses. The previous breakout area would become relevant if risk assets started to suffer [1].
ING maintains its current forecasts for EUR/USD at 1.17 for the end of September and 1.18 for year-end, though these projections are under review this week [1].
CONCLUSION
ING's analysis suggests a moderately positive outlook for the Euro against the US Dollar, supported by favorable positioning and improving Eurozone economic indicators. The risk of a sharp EUR/USD decline appears limited unless broader risk assets weaken. ING's forecasts remain steady for now, with potential adjustments pending further data.