EUR/USD continues to trade close to 1.090, a level that symbolises the current balance between USD-positive US political developments and USD-negative Fed rate repricing. But there remains very little contribution from the Euro (EUR) leg to the pair’s recent price action, ING’s FX strategist Francesco Pesole notes.

EUR/USD to trade near 1.08 in the coming weeks 

“On the data side, we saw ZEW surveys yesterday, which confirmed expectations for a drop in the German expectations gauge, but also a surprising recovery in the current situation index – perhaps on the back of the more market-friendly result of the French election. The eurozone-wide expectations survey contracted too, confirming the loss of momentum in activity sentiment over the past month.”

“We expect this cool-off in the eurozone’s growth outlook can coincide with markets becoming gradually more nervous about the French fiscal situation as the political gridlock continues. That is one of the reasons why we continue to see 1.08 as more likely than 1.10 in the coming weeks.“

“The only event to watch on the macro side in the eurozone today is the final release of CPI data for June. Consensus is not expecting any revision from the flash estimates, which saw headline inflation at 2.5% and the core gauge at 2.9% YoY.”