EUR/USD will struggle to sustain a move above 1.07: Analyst

UR/USD will struggle to sustain a move above 1.0700 today and remain bearish for the near term, said analyst says at ING.

"Speaking in Washington yesterday, ECB President Christine Lagarde said the European Central Bank watches FX fluctuations 'very carefully', and obviously, the ECB takes into account the impact FX moves have on inflation. Our team wrote on this subject yesterday," said Chris Turner, Global Head of Markets and Regional."

"The conclusion was that it would take quite a large fall in EUR/USD - e.g. to parity and oil prices to be well above $100/bl to make much material difference to eurozone inflation and ECB policy. In short, we do not see ECB rhetoric as much of a support to EUR/USD at current levels."

"Eurozone data is light today - just the February current account data. The eurozone enjoyed a near EUR40bn current account surplus in January - a reminder that conditions are very different from when EUR/USD was trading below parity in late 2022 and the Eurozone was running a EUR30bn current account deficit on the back of surging oil and gas prices...We suspect EUR/USD will struggle to sustain a move above 1.0700 today and remain bearish for the near term."

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