ING: The EUR - FJElite

EUR/USD was hit in Asia as oil prices spiked after failed peace talks. As above, the fact that the combatants have not immediately resumed destroying energy infrastructure in the region suggests it could have been worse. That is why EUR/USD is not trading closer to 1.1600. Also limiting EUR/USD downside today are probably events in Hungary (see below). The convincing pro-EU turn among the Hungarian electorate will be very welcome news for Brussels and may prompt a pause for thought among populist Euro-sceptic political parties across Europe. It will be interesting to see whether the Hungarian news delivers some independent euro strength today - e.g., in the likes of EUR/GBP and EUR/CHF.

Barring another major leg higher in energy prices today, we think something like 1.1700 looks a comfortable level for EUR/USD in the near term. The data calendar is light, but Luis de Guindos will be the first of many European Central Bank speakers this week. It looks too early for the ECB to completely rule out a rate hike in March (which looks unlikely), but we expect the pricing of a June ECB rate hike to hold up. 22bp is currently priced forthat meeting.