Francesco Pesole at ING highlights persistent downside risks for EUR/USD, identifying the 1.1320–1.1330 area as a key support level that could be tested swiftly if US economic data surprises to the upside or if oil prices experience another sharp increase [1]. Despite recent Eurozone economic resilience, as evidenced by the Ifo index and strong PMIs, these positive factors are being offset by wider eurozone spreads, particularly French fiscal concerns [1]. French 10-year yields are currently trading 110 basis points above German bunds, reflecting heightened fiscal worries [1]. Reports suggesting Marine Le Pen may support the proposed budget to avert a bond crisis have provided little relief, and risks remain tilted towards further spread widening [1]. Pesole notes that while the FX impact is difficult to isolate, the prevailing narrative is unlikely to support the euro in the near term [1]. ING does not anticipate new lows for EUR/USD imminently, but acknowledges that downside risks persist, especially in the context of ongoing fiscal uncertainty and potential market-moving events in the coming weeks [1].
CONCLUSION
French fiscal concerns and widening spreads are exerting pressure on the euro, with ING warning of persistent downside risks for EUR/USD. The market is closely watching key support levels and potential catalysts such as US data and oil prices. Near-term euro support appears unlikely given the current environment.