ING
May 19, 2026
FX Daily Recovery in Bonds and EUR USD Looking Fragile
Daily UpdateFXRates Govt BondsMacro Economic IndicatorsOther
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.
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.
Table of Contents
- 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
- Disclaimer
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Authors
Francesco PesoleFrantisek TaborskyChris Turner
Securities
EURUSDUSDJPYDXYNVDA
Themes
Geopolitical Tension and FX VolatilityCentral Bank Divergence in CEE
Regions
North AmericaEuropeAsia PacificUnited StatesJapanCanada