Weakened Merz doesn’t do too much damage – ING

It’s been quite an attractive story to tell that if German fiscal expansion caused the EUR/USD exchange rate to rise significantly in March (from 1.04 to 1.09), then a weakened Friedrich Merz should see EUR/USD fall a few figures back, ING’s FX analyst Chris Turner notes.

The market remains nervous over US policy

“His failure in the first confirmation round in German parliament yesterday did briefly send EUR/USD back to 1.1310, but EUR/USD is proving quite resilient. There’s also an argument that China’s monetary stimulus announced overnight is a EUR/USD positive as it helps global demand trends.”

“As for EUR/USD, it held important support at 1.1260 last week. The market remains nervous over US policy, and dollar price action is quite poor. We have a slight bias that it can push through 1.1380 to 1.1420 in quiet markets.”