Synopsis:

ANZ expects EUR/USD to consolidate near-term, given overbought technicals and heavy positioning around 1.17, but sees the broader trend toward 1.20 staying intact as macro and sentiment drivers remain EUR-supportive.

Key Points:

• Positioning Clustered at 1.17:
  • DTCC data shows significant EUR call positioning near 1.17, making it a critical pivot.
  • A sustained break above 1.17 would unlock the path toward 1.20.

• ECB Stance Still Supportive:
  • Vice President de Guindos reiterated a data-dependent, measured approach, suggesting the ECB is close to the end of its easing cycle.
  • Better-than-expected German data (PMI, ZEW, IFO) reinforces Eurozone resilience.

• Sentiment Turning Positive:
  • One-week risk reversals flipped from negative to positive, marking one of the fastest sentiment shifts this year.

• Technical Picture Calls for Pause:
  • 14-day RSI signals EUR/USD is overbought, implying near-term consolidation likely before another leg up.

• Trade Talks in Focus:
  • Any progress or extension in the EU-US trade truce would be EUR-positive and USD-negative.

Conclusion:

While ANZ sees scope for short-term EUR/USD consolidation, fundamentals, positioning, and sentiment all align for an eventual break toward 1.20, with 1.17 as the key trigger level to watch.