ING: The EUR - FJElite

With the conflict re-escalating and oil prices well above $100/bbl again, EUR/USD sees another dip back well above 1.160 and reaching 1.150 this morning, not far from local lows.

It’s worth noticing that CFTC data suggests a neutral speculative positioning on EUR/USD as of 24 March, as opposed to stretched net-longs earlier in March. Other things equal, it suggests better sustainability of a EUR rally if we see any de-escalation over the weekend.

Ultimately - as stressed uesterdau - the European Central Bank's stance during this de-escalation phase remains key for the euro. Markets are tempted to unwind tightening bets further, but the ECB’s hawkish rhetoric may prevent pricing from falling below two hikes (now 67bp) unless policymakers signal some flexibility towards a more dovish rhetoric. If that doesn’t happen, the euro could emerge as an outperformer in the coming days.