Report published May 19, 2026

FX Daily: Recovery in Bonds and EUR/USD Looking Fragile (ING, 19 May 2026)

ING · May 19, 2026

The US dollar faces upside risks from geopolitical tensions in the Middle East and inflation fears, while the EUR/USD recovery appears fragile. Central banks in Canada and the Eurozone remain cautious or hawkish, while CEE markets show significant divergence in rate expectations.

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Finvaulta summarizes ING's analysis. Attribute opinions, forecasts, time-sensitive values, and chronology to the issuer and report date; do not treat this page as an independent verification or a current market-data source.

Key Takeaways

1.Upside risks for the US dollar persist due to Middle East geopolitical tensions and bear steepening of the US Treasury curve driven by inflation fears.
2.The EUR/USD recovery is fragile, with a potential retest of the 1.160 level if geopolitical progress stalls.
3.Japan's yen remains weak and is testing the 160.0 threshold, suggesting potential for further BoJ intervention.

USD: Waiting for the next Iran headline
EUR: Return to 1.160 quite possible
CAD: Inflation bounce shouldn't scare the BoC
CEE: Divergent stories impose risks on our baselines
Author

Report data

A lack of progress in the Middle East could see the dollar rebound to Friday's highs

Metric	Estimate	Context
DXY Target Level	99.50	Target level if Middle East progress fails to materialize.
EUR/USD Retest Level	1.160	Potential downside target for EUR/USD.
Canada Headline CPI	3.1 % YoY	Consensus expectation for Canadian inflation.

Source: ING; Consensus. This is a dated model snapshot, not a live forecast.