Euro Sees Upside Risks as Dollar Momentum Fades

ING analysts have identified upside risks for the euro following a sharp shift in the US dollar. According to their assessment, this shift may not be temporary and is supported by structural factors that could help the euro recover in the coming weeks.

The dollar's strength was influenced by evolving expectations around US monetary policy and global risk sentiment. However, with the US Dollar Index retreating from recent highs, ING notes that the euro has room to breathe and potentially make further gains.

ING's analysis is based on technical and fundamental factors, including the pair's consolidation above key support levels. The European Central Bank's policy stance, which has been more accommodative than initially expected, also supports the single currency.

For traders and investors, monitoring recent swing highs in the EUR/USD chart will be crucial. A sustained move above these levels could trigger further gains, while renewed dollar strength could see the pair retreat.