EZ politics slowly creeping into the Euro - ING

Analyst(s) at ING provided their brief view on the effects of ongoing political risks emerging out of the Euro-zone on the EUR/USD major. 

Key quotes:

"EUR/USD is reversing its recent uptrend as the clouded EZ political outlook starts being slowly reflected in EUR. The French-German sov spread reached new multi-quarter highs yesterday (after Le Pen launched her Presidential campaign over the weekend) while EUR/CHF is flirting with its low last month of 1.0640. As EUR/USD is pricing virtually no political risk premium on either the spot or volatility sides, there is more scope for downside. We note that speculative short EUR/USD positioning is at the lowest level since May 2016 (11% of open interest based on CFTC data, with the data not reflecting the post Feb FOMC EUR/USD short squeeze), suggesting a less bumpy road for EUR/USD decline. EUR/USD to largely trade below 1.0700 today (today’s disappointing December German IP should reiterate this trend)."