Euro: France spreads weigh on EUR – ING
Francesco Pesole at ING sees EUR/USD downside risks persisting, with the 1.1320–1.1330 area as key support that could be tested quickly on stronger US data or another sharp Oil move higher.
ING's Francesco Pesole warns of persisting downside risks to the EUR/USD exchange rate, with the 1.1320-1.1330 level as a key support that could be tested quickly on stronger US data or a sharp rise in oil prices. He highlights that Eurozone economic resilience is being tempered by wider French spreads and fiscal concerns, which he believes will not bolster the euro in the short term.
The 10-year French yield is currently trading 110 basis points above German bunds, and Marine Le Pen's potential backing of the proposed budget has not provided much relief. Overall, the risks are leaning towards further widening of spreads, which is unlikely to aid the euro under the current circumstances.
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