Euro: Retest of 1.1600 against US Dollar seen likely – ING

May 19, 2026 fxstreet.com

⦿ Executive Snapshot

What: ING forecasts a likely retest of the Euro at 1.1600 against the US Dollar.
Who: Francesco Pesole from ING, European Central Bank (ECB), G7 summit participants.
Why it matters: This analysis highlights the potential vulnerability of the Euro amidst current market dynamics and ECB monetary policy, which could impact forex trading strategies.

Francesco Pesole indicates that the ECB needs to maintain a hawkish stance to manage long-end yields effectively.
The ongoing G7 summit in Paris is not expected to produce significant market-moving outcomes.
Current pricing of 73 basis points of tightening in the 2026 OIS curve is deemed excessive by Pesole.
The expectation is that EUR/USD has a greater risk of falling back to 1.1600 rather than rising to 1.1700 in the near term.
Market conditions are complicated by Europe's ongoing crisis, which may influence resource and supply chain independence.

Historically, the ECB has had to navigate tight monetary policy to maintain control over yield curves, particularly in volatile market conditions.
The current geopolitical climate and economic pressures are shaping the ECB's policy decisions, as well as market expectations for the Euro.

The immediate implication is a potential market shift towards increased volatility in EUR/USD trading, as the Euro may weaken against the Dollar.
Long-term, if the ECB's hawkish stance does not align with market expectations, it could lead to a reassessment of Euro valuation in global forex markets.

A significant risk lies in the ECB's ability to maintain its hawkish position without triggering excessive market reactions.
Market sentiment could be influenced by unexpected outcomes from the G7 summit or changes in geopolitical dynamics, affecting EUR/USD performance.

Traders should monitor the outcomes of the G7 summit for any unexpected market-moving announcements.
Future ECB communications regarding monetary policy and economic outlook will be critical in assessing the trajectory of EUR/USD.