EUR: Positioning Supports Gradual EUR/USD Gains - ING

ING analyst Chris Turner noted in his latest commentary that futures market data shows asset managers and leveraged funds are increasing EUR exposure, while speculators still hold underweight positions. This positioning structure provides support for a gradual rise in EUR/USD.

**Improving Data Provides Base Support**

Turner pointed out that Germany's IFO business climate index and the eurozone's Purchasing Managers' Index (PMI) are both recovering, which strengthens the euro's fundamental resilience. He believes that unless risk assets suffer a major setback, there is no reason for EUR/USD to break significantly below the 1.1660/70 range. The current exchange rate is trading near 1.16681, just above this support zone, indicating that the market temporarily acknowledges this bottom assessment.

**Institutional Forecasts Remain Moderately Bullish**

ING is currently reviewing its EUR/USD target forecasts, having previously projected the pair to reach 1.17 and 1.18 by end-September and end-year, respectively. Given the pace of positioning improvement and data recovery, this forecast path remains achievable. However, market reports indicate that some analysts diverge on the euro's outlook, with views suggesting that traders' expectations for euro strength may be excessive, and the currency could retreat to around 1.10 next year.

**Risk Appetite Remains Key Variable**

Turner specifically emphasized that whether EUR/USD can hold current support depends on the performance of global risk assets. If equity markets and other risk assets face selling pressure, safe-haven sentiment could drive a dollar rebound, dragging the euro below the aforementioned support zone. Conversely, if risk appetite remains stable, improved positioning could help push the euro gradually toward ING's forecast targets.