EUR/USD to trade below 1.11 unless more optimistic news on Ukraine conflict – ING

EUR/USD rose on the back of the market’s optimism on a de-escalation of Ukraine’s conflict. Still, economists at ING expect the world’s most popular currency pair to stay below 1.11 in absence of progress in the Ukrainian conflict.

European Central Bank cautiousness leaves Ukraine conflict the main driver

“Today, expect more news on the conflict to dominate EUR/USD price action, with any impact from the European Central Bank (ECB) policy announcement that could be rapidly out-shadowed.”

“Our base case is that the Ukraine conflict and the spike in energy prices will force the ECB to pause its transition to a more hawkish stance. Market expectations are broadly aligned with a more cautious tone by the ECB, and we doubt that this scenario will trigger significant EUR/USD weakness.”

“Unless we see more optimistic news on the Ukraine conflict, the EUR/USD rally may struggle to decisively break above 1.11.”

See – ECB Preview: Forecasts from 11 major banks, options open amid heightened uncertainty