EUR/USD failed to build on gains last Friday. Economists at ING analyze the pair’s outlook.

China misfire sees EUR/USD rally slow

Investors seem a little disappointed that Friday's State Council meeting in China did not result in any fresh stimulus - hence the spike in USD/CNH back to 7.15 today. Chartists will be looking for this USD/CNH rally to stall at 7.15/16 – failure to do so could keep the Dollar a little better bid and weigh on EUR/USD.

If EUR/USD is to maintain last week's bullish momentum, short-term support levels at 1.0910/30 should hold. 

We continue to favour a near-term move to 1.1000/30 and probably higher as investors position for the second half Dollar decline.