EUR/USD: Strong NFP to set the stage for a break to the 1.16 lows – ING

Diverging transatlantic trends continue to drive EUR/USD lower and it is hard to see what will change things near-term, according to economists at ING Bank.

See: EUR/USD to tank towards 1.16 as Europe set to maintain tighter restrictions for longer – MUFG

Serial EUR underperformance to continue

“So far, support at 1.1700 has held, but a strong NFP and a further US Treasury market sell-off could be the catalyst for a break down to the low 1.16s. Providing some counter to this trend could be commodity prices this week, where upgrades to the IMF global growth forecasts (largely in the US and China) could prove supportive of the commodity complex in general and prove slightly dollar negative.”

“The European calendar looks quiet during this holiday-shortened week, though some scrutiny could be given to the minutes of the March European Central Bank meeting released on Thursday. Here, the focus will be on how broad support was for the front-loading of the Pandemic Emergency Purchase Programme, which has since seen weekly net ECB PEPP buying rise to EUR19-20 bn from a prior EUR12 bn.” 

“We’ll see whether the EU’s Recovery Fund can overcome the hold-up in the German constitutional court – which would at least be some welcome news. If not, expect serial EUR underperformance to continue.”