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, potent

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.