Synopsis:

ANZ remains constructively bullish on EUR/USD, noting that recent gains above 1.11 are supported by persistent USD weakness. While EU sentiment has soured post-tariffs, positioning data suggests the EUR long trade is not yet overcrowded, keeping dips shallow in the near term.

Key Points:

• EUR/USD Resilience:
  Despite deteriorating sentiment from April ZEW and Sentix surveys, EUR/USD has held above 1.11, signaling strong support from USD weakness.

• EU Sentiment Turns Lower:
  German ZEW expectations plunged 66pts to -14, and current conditions sit near pandemic lows. This aligns with broader EU pessimism and points to potential softness in upcoming PMI data.

• Positioning Not Overstretched:
  CFTC data shows EUR/USD net longs are still modest, driven more by short covering than aggressive long buildup. This suggests the trade is not yet crowded.

• Cross Risks:
  While EUR/USD remains supported, downside may appear on non-USD crosses like EUR/GBP and EUR/CHF, particularly if PMIs disappoint.

Conclusion:

ANZ maintains a positive near-term outlook for EUR/USD as USD headwinds persist, but acknowledges that EUR cross-pair risks are rising with faltering EU data. The EUR/USD rally still has room to run, especially as positioning remains far from euphoric.