EUR: Expect limited fallout given no major EZ political surprises - ING

In view of Viraj Patel, Research Analyst at ING, the euro should be breathing a big sigh of relief after this weekend’s ‘Super Sunday’ of political events looks set to draw no major surprises that may have derailed the single currency (note while a German government is set to be formed over the coming weeks, the final results of the Italian election – which exit polls, albeit unreliable, suggest will yield a hung parliament – has yet to be confirmed at the time of writing).

Key Quotes

“Still, in the absence of any last-minute Italian election upsets, the focus for EUR markets will shift away from European politics and towards (1) US politics and trade policy and (2) the ECB meeting later in the week (Thu). We expect the former is likely to dominate the latter in terms of the EUR’s general direction of travel this week – although any dissension within the Governing Council from the more vocal and noisy hawks could force the ECB’s forward guidance to shift to a slightly less dovish tone (which would be mildly EUR supportive). Look for EUR/USD to trade within the 1.2200-1.2450 range this week – with Trump’s protectionist talk owing to a mildly bullish bias for the pair.”