EUR: Finding fresh support – ING

CFTC data shows net long positioning on EUR/USD at 15.6% of open interest since 15 July. That is the highest since January 2024, but still a relatively contained figure considering the pair is trading almost 10% above early-2024 levels. CFTC figures isolate speculative positioning, signalling that capital and hedging flows are playing a bigger role in the dollar’s weakness, ING's FX analyst Francesco Pesole notes.

Next cut remains expected only in December

"Speculation on a potential no-deal scenario in US-EU trade negotiations is gathering pace. Reports indicate that some EU countries are pushing for retaliatory measures as they see the chances of a trade deal faltering. The Trump administration has shown little tolerance for retaliatory measures, and there is a risk this could spiral (even if temporarily) into a tit-for-tat tariff escalation."

"The euro’s ability to maintain preference over the dollar amid tariff tensions will depend on the extent of any escalation and whether the EU emerges as a relative loser while other countries secure significant deals with the US."

"Currently, the euro is not facing domestic tariff-related pressure, and markets are not pricing in a more dovish ECB tone ahead of Thursday’s meeting; the next cut remains expected only in December. We do not see sufficient bullish momentum to push EUR/USD back to the highs of early July (near 1.180), with 1.160 appearing a more appropriate anchor than 1.170, given the risks of further hawkish repricing by the Fed."