EUR/USD could surge above the 1.06 level – ING

EUR/USD is once again attempting to find some support in the upper half of the 1.05-1.06 range. Economists at ING believe that the world’s most popular currency pair could move higher today, but the rally is set to stall around the 1.0650 zone.

Eyes on ZEW and ECB speakers

“Some resilience amid yesterday’s turbulent market conditions and a potential stabilisation in risk sentiment today could combine to fuel a break above 1.06 today. Still, the upside remains limited given some USD buying and lingering concern about the ban on Russian oil currently under discussion in the EU.”

“Markets will focus on ZEW figures out of Germany today. Both the “expectations” and “current situation” surveys are set to show another drop in May given high energy prices and the prolonged geopolitical risk. However, the impact on EUR/USD of the latest ZEW releases has been quite negligible.

“Markets now appear to cement their expectations around a July hike (which is also our base case) but remain torn around the size of rate increases in 2022. One of the most hawkish members of the Governing Council, Germany’s Joachim Nagel, will speak first this afternoon, followed by the more moderate François Villeroy and Luis De Guindos.”

“We see some modest upside risk for EUR/USD today, with any rally possibly stalling already around the 1.0650 level.”