EUR: Short-term upside room in the crosses - ING

EUR/USD remains cheap and oversold despite yesterday's rebound. We estimate that the pair is still trading around 1.5% below its short-term fair value, signalling some tariff related risk remains in the price, ING's FX analyst Francesco Pesole notes.

Any rebound may well fall short of 1.050 in EUR/USD

"The euro could fare well in the crosses if more days pass without Europe being explicitly mentioned in Trump's tariff comments. That support may, however, prove rather short-lived as things can - as we learned yesterday with Canada and Mexico - change abruptly on protectionism, and the euro remains generally unappealing from a number of macro fundamentals. This means any rebound may well fall short of 1.050 in EUR/USD."

"On the data side, today's ZEW surveys out of Germany will tell us whether there is any glimmer of hope in the otherwise gloomy activity picture. Expectations are for broadly unchanged reads since December, which would confirm the recessionary mood."