European currencies are strengthening amid a favourable backdrop. Nonetheless, economists at ING do not expect a smooth ride as energy prices are set to rise. 

Enjoying an ideal mix for now

“European currencies are enjoying a strong rally, as lower energy prices (crude was hit by the EU oil price cap proposal) and higher-than-expected PMIs yesterday had already offered some support to European sentiment before the Fed delivered some dovish minutes.”

“We remain doubtful that it will be a smooth ride to recovery for European currencies, and our commodities team continues to see upside risks for energy prices into the new year despite recent developments.”