ING analyst Francesco Pesole said in a report that a continued sell-off in
French sovereign bonds driven by fiscal concerns would likely push the euro
lower. He flagged rising fiscal risk premia and a cooling of ECB rate-hike
expectations as current downside pressures on the currency. Although a recent
retracement in French bond prices has supported a bounce in the euro from its
lows, Pesole said sustained upside is unlikely; if bond-market stress
intensifies, the euro could fall further, potentially toward $1.10.
