EUR/USD is showing no inclination to trade back above 1.10, ING’s FX analyst Chris Turner notes.

Threat of higher oil prices is a large euro negative

“Normally we would argue that the prospect of fresh Chinese fiscal stimulus would be a euro positive – given the eurozone's relatively large share of exports to GDP. However, the Middle East situation and the threat of higher oil prices is a large euro negative and one which will hold the euro back this month.”

“We are disappointed that the EUR/USD rally stalled at 1.12 this Autumn and instead, 1.08 seems far more probable than a retest of 1.12.  We continue to flat-line our multi-quarter EUR/USD forecasts at 1.10 until the outcome of November's US presidential election is known.” 

“There is very little on the eurozone calendar today and while EUR/USD may press 1.10 on the back of this morning's news out of China – the Ministry of Finance will brief on fiscal policy this Saturday – we suspect sellers to emerge there.”