EUR: The surprise beneficiary - ING

The euro is proving the surprise beneficiary of the trade-driven sell-off in risk assets, ING's FX analyst Chris Turner notes.

EUR/USD faces s massive trend resistance in the 1.11-1.12 area

"Normally, EUR/JPY has a strong positive correlation with risk assets, whereas this week, the euro has been holding its own. That has nothing to do with a positive re-assessment of eurozone growth prospects. No, the news there is terrible and could get worse should EU trade officials - meeting on Monday in Luxembourg - decide to retaliate."

"Recall that it's really only the trade blocs of the EU and China which have the economic muscle to retaliate. Instead, we believe it is the alternative liquidity offered by the euro. No doubt this is something European policymakers are keen to explore - and we'll be writing on the subject over coming weeks on what needs to happen to make the euro a more attractive asset for FX reserve managers."

"For EUR/USD, there is some massive trend resistance in the 1.11-1.12 area - marking its bear trend off its 1.60 high in 2008. We'll probably need to see another big move lower in US equities to take out that area near term. However, we suspect buyers will emerge in the 1.1020 as doubts continue to grow about a sea-change in the dollar's pre-eminient position as a store of value."