EUR/USD is back to being fully driven by sentiment around the Russia-Ukraine conflict. The pair has climbed back to 1.10 and should stabilize above here, shrugging off weak ZEW Survey from Germany, economists at ING report.

Grim ZEW should have little impact

“Markets appear to be taking a relatively sanguine approach when it comes to ongoing peace talks despite no signs of de-escalation, and have continued to gradually price some geopolitical risk out of commodities and European currencies.”

“Today, some focus will also be on data in the eurozone, with the German ZEW set to show a very significant contraction given the impact of the war and high energy prices. Still, this should not itself prevent a move back above 1.10 in EUR/USD today, given the ECB’s rhetoric that fighting inflation now matters more than growth considerations.”