Euro Edges Higher as Dollar Weakness Reverses Sell-Off

The euro is experiencing a gradual recovery from the sell-off it suffered last week against the US dollar, according to ING's Chris Turner. The EUR/USD pair has been moving back towards its pre-sell-off level of around 1.1650.

This upward trend in the euro can be attributed to a softer dollar backdrop compared to emerging market currencies and pro-growth G10 currencies. This supportive environment is aiding the euro's recovery, despite uncertainty surrounding the Fed story.

However, Turner flags a potential risk for the euro: the upcoming local elections in Germany. A significant success of the AfD party could raise questions about the stability of Chancellor Merz's government.