The euro has benefited from the unwinding of US Dollar (USD) longs, but remains generally unattractive in the crosses, ING’s FX analysts Francesco Pesole notes.

EUR/USD to trade with a downside bias

"The big event for the euro is obviously Sunday’s German election. Polls currently place CDU/CSU in the lead with around 30%, followed by the far-right AfD at 20% and the outgoing SPD at 15%. Markets are not pricing in much risk related to a stronger result by the AfD, as other major parties have pledged to keep the far right out of any coalition."

"We could still see markets finding good value in closing EUR/USD positions at this higher level (compared to the past few weeks) ahead of the German risk event. Our view remains bearish on EUR/USD."