EUR/USD remains gently bid. The pair is set to test resistance at 1.0785 and potentially 1.09, economists at ING report.

Options market turns more bullish

“Measures such as the risk reversal – the cost of a 25 delta EUR/USD call option versus a similar EUR/USD put option – continue to move in favour of EUR/USD upside.” 

“As recently as October, the markets were prepared to pay 2% extra in volatility terms for a 3-month 25 delta EUR/USD put option. That skew for Euro puts has now narrowed to 0.67%. The skew turning positive – in favour of EUR/USD calls – would be a big moment for the FX market.”

“The seemingly benign investment environment (despite the horrors in Ukraine) probably has investors wanting to buy EUR/USD on dips.” 

“Today's EUR/USD bias looks towards resistance at 1.0785 and potentially towards the 1.09 area tomorrow, should the US CPI release oblige.”