According to ING’s Francesco Pesole, the EUR/USD currency pair may have reached its bottom last week, contingent on markets maintaining a constructive outlook regarding further geopolitical de-escalation [1]. Pesole highlights that a sustained move above the 1.15 level for EUR/USD would require two key factors: a dovish repricing of the Federal Reserve (Fed) stance, either through US economic data or Fed communication, and a stabilization in overall risk sentiment [1].
The article notes that the resumption of military strikes overnight serves as a reminder for caution in the EUR/USD market, despite optimism about potential de-escalation in geopolitical tensions [1]. Pesole points out that while technology stocks previously supported EUR/USD during the spring due to their independence from interest rates, current turmoil in the chip sector may now limit further gains for the currency pair, even as headlines from the Middle East improve [1].
With a light eurozone economic calendar, the focus for EUR/USD is expected to shift to the upcoming Federal Open Market Committee (FOMC) meeting. ING anticipates that, as a baseline reaction to a modestly dovish surprise from the Fed, EUR/USD could return to the 1.1400–1.1450 range in the coming days [1].
CONCLUSION
ING’s analysis suggests that the EUR/USD pair’s near-term direction will be shaped primarily by developments in US monetary policy and global risk sentiment. While a move above 1.15 is possible, it remains dependent on dovish signals from the Fed and a calming of geopolitical risks.