In the midst of the Dollar's upward correction, the Euro has also lost its idiosyncratic bullish momentum. Economists at ING expect the EUR/USD to test 1.05 support on a strong US Consumer Price Index (CPI) report.

Lacking the domestic push

“Our medium-term view is still one of EUR/USD appreciation over the course of 2023, but we don’t see clear drivers for a EUR/USD rebound this week, especially from the eurozone side.”

“It would probably require a rather low US CPI figure to send the pair sustainably back above 1.0800-1.0850. We see a greater chance of the pair coming under some additional pressure, and a strong US CPI read could mean the 1.0500 support (1.0490 is the 2023 low) is tested.”

“President Christine Lagarde will speak on Wednesday: expect another attempt to build market expectations around more tightening, although other ECB members have already gone a long way communication-wise and we don’t see her speech as a big risk event for the Euro.”