The euro received some unusually positive news on the activity side yesterday, as the ZEW surveys came in slightly stronger than expected in Germany (13 vs 10) while rebounding quite markedly (from nine to 20) in the eurozone-wide index, ING’s FX analyst Francesco Pesole notes.

EUR to stabilize around 1.09 for now

“Those are all soft indicators that the ECB itself has often disregarded, but might contribute to a sense that the negative growth narrative has bottomed out, ultimately curbing dovish expectations.”

“EUR/USD is predominantly driven by external factors. The substantial drop in oil prices has narrowed the scope for a further drop based on market factors, but we continue to suspect that pre-US election positioning should favour a weaker EUR/USD.”

“Tomorrow’s ECB meeting may prove to have only a marginal impact on markets. Our baseline is for stabilisation around 1.09 for now, but – as mentioned – the balance of risks is tilted to the downside heading into 5 November.”