EUR: Squeezing the last bits of fiscal optimism - ING

Our considerations above on somewhat fading optimism on a speedy ceasefire in Ukraine have likely contributed to softer EUR momentum, ING's FX analyst Francesco Pesole notes.

EUR/USD to return above 1.090 by Wednesday

"EUR/USD is still around 1% above our estimate for its short-term fair value, as a two-year swap rate gap around -150bp is more consistent with 1.07 than 1.09, and our one-month view on the pair remains bearish. However, this week is quite data-heavy and the euro could squeeze some extra benefit from fiscal optimism."

"We have a few European Central Bank speakers to watch this week, but we are quite doubtful that any new guidance will emerge before we see more clarity on the impact of US tariffs." 

"Our call for this week is a return above 1.090 in EUR/USD by Wednesday followed by some softness towards the back end of the week as markets look past data and build more defensive positions ahead of the 2 April tariff event. We still doubt there is enough bullish thrust to take the pair above 1.10."