EUR: Testing the big resistance – ING

The EUR/USD rally stalled again in the 1.160-1.165 area and it is plausible markets may require a more compelling macro story (most likely from the US) rather than the mere unwinding of geopolitical risks for a break higher, ING's FX analyst Francesco Pesole notes.

EUR/USD remains predominantly a USD story

"A lot of focus in Europe is on the ongoing NATO summit in the Netherlands which Trump joined yesterday evening. Any signs that the US safety guarantees for European allies are faltering further – or becoming even more transactional than expected – can sour some sentiment in European markets. Especially after Spain’s refusal to meet the 5% defence spending target has curbed any enthusiasm for a coordinated spending boost."

"That said, EUR/USD remains predominantly a dollar story, and the market’s blatant disliking of the greenback – confirmed by limited gains during the Middle East turmoil – means the upside potential remains intact."