EUR: EU Commission budget likely to be watered down – ING

The EU Commission's EUR 2tn budget proposal has continued to face harsh criticism from Germany, ING’s FX analyst Francesco Pesole notes.

EUR to move to 1.150 in the near term

"Chancellor Friedrich Merz admitted it will be a 'tough fight over the budget for the next two years'. The chances of Ursula von der Leyen’s proposal securing unanimous approval without being materially watered down look very slim."

"That was, anyway, meant to be a long-term topic for the euro, which for now continues to track US developments amid dormant ECB rate expectations. But, next week’s ECB meeting may prove less dull than expected. A cut is highly unlikely given recent communication, but tariff risks and a strong euro could revitalise a dovish front that otherwise seemed settled on a neutral pivot."

"That is another factor keeping us moderately bearish on EUR/USD, and we continue to favour a move to 1.150 in the near term."