Friday's US jobs report was not weak enough for EUR/USD to sustain a move over 1.06. Rate spreads have become a little more supportive for EUR/USD, ING’s FX analyst Chris Turner notes.

Few reasons for the ECB to be cheerful right now

“The highlight this week will be Thursday's European Central Bank meeting. A 25bp cut is probably more likely now, although the press conference could potentially open the door to sub-neutral (i.e., less than 2.00%) policy rates next year. There certainly seem few reasons for the ECB to be cheerful right now, even though the hard data is holding up better than expected.”

“After heavy losses in October and November, EUR/USD has since enjoyed two weeks of consolidation. It now looks like time for the bear trend to get going again. And despite seasonal trends which are normally EUR/USD supportive in December, we favour EUR/USD drifting back to 1.0500/0520 short-term and potentially breaking lower in the week should US CPI data or the ECB meeting have something for EUR/USD bears like ourselves.”