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EUR/USD: Still facing downside risks – ING

The French election resulted in a hung parliament, a somewhat counterintuitive outcome in favour of the market. The Euro (EUR) still faces downside risks during the complicated coalition negotiations and given long-term fiscal concerns, notes Francesco Pesole, FX Strategist at ING.

EUR/USD is primed for some selling this summer

“The French election resulted in a hung parliament, a somewhat counterintuitive outcome in favour of the market. But given fiscal concerns, markets had a preference for Marine Le Pen’s alliance over the left-wing group to win more seats. The Euro still faces downside risks during the complicated coalition negotiations and given longer-term fiscal concerns.”

“So if you’re looking for a stellar performance, look elsewhere than the Euro. Political uncertainty aside, Eurozone activity surveys are starting to lose momentum; and an ECB reliant on its own (optimistic) inflation projections can still cut twice in 2024.”

“We believe that any US macroeconomic data-driven rally near 1.10 will offer opportunities for strategic EUR/USD selling this summer.”

Source: Fx Street

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