EUR/USD Sees Fresh Hopes Amid Geopolitical De-escalation

ING's Francesco Pesole suggests that if markets maintain a constructive view on further geopolitical de-escalation, EUR/USD may have bottomed last week. To achieve a sustained move above 1.15, however, two conditions must be met: dovish Federal Reserve (Fed) repricing and stabilised risk sentiment. While tech stocks' independence from rates helped support EUR/USD during the spring, the current turmoil in the chip sector may now cap gains despite improving Middle East headlines. With a light eurozone calendar, EUR/USD is expected to react mainly to the Federal Open Market Committee (FOMC), potentially returning to the 1.1400-1.1450 range in coming days.

As Pesole notes, 'For a sustainable move back above 1.15, two pieces are still missing: dovish Fed repricing, either through US data or communication, and a stabilisation in risk sentiment.'