ING THINK
Loading…
FX BANK FORECAST · COVERAGE
Institutional FX coverage in your inbox
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 30 institutional desks. No promotion.
FX BANK FORECAST · COVERAGE
Aggregated year-end forecasts, scenario shifts, and curated analyst notes from 30 institutional desks. No promotion.
ING's May Italian IP data shows a modest -0.3% m/m contraction, breaking three consecutive gains but confirming sector resilience. The quarterly run-rate of +0.9% QoQ supports ING's view that industry remains a growth driver into Q2. With no imminent calendar events for Italy, the focus shifts to broader euro area data and ECB guidance for EUR/USD direction. Our consensus target for EUR/USD at 1.075 reflects modest upside, aligned with the narrative of a resilient but not booming eurozone economy.
The desk argues that Italian industrial production's small May contraction is a breather, not a reversal. Per the full note by ING Senior Economist Paolo Pizzoli, the -0.3% m/m print was only slightly worse than consensus and leaves the March-May quarterly gain at +0.9% QoQ. This confirms industry as the most resilient sector in H1 2026, driven by investment goods (+4.2% YoY) and transport equipment (+11.5% YoY).
The desk rejects the alternative read that the contraction signals a broader slowdown. The decline was concentrated in consumer durables (-8.9% YoY), a volatile component, while core industrial production remains solid. The data supports ING's view that GDP will expand marginally in Q2, bolstered by industry.
Our consensus target for EUR/USD at 1.075 (range 1.04–1.12) is modestly bullish relative to the current spot near 1.056. This view aligns with the narrative of a resilient but unspectacular eurozone economy. Key firm forecasts include: - jpmorgan: 1.10 (Mar26, bullish) - bofa: 1.04 (Mar26, bearish) - goldman: 1.08 (Mar26, aligned) - citigroup: 1.06 (Mar26, mildly bearish) - ubs: 1.12 (Mar26, bullish) - hsbc: 1.05 (Mar26, bearish) - morgan stanley: 1.09 (Mar26, aligned)
Our call sits near the mid-point but leans slightly bullish, as we view the resilience in eurozone industry as supportive for EUR/USD.
Aligned firms include goldman (1.08), morgan stanley (1.09), and ubs (1.12), all citing eurozone industrial resilience underpinned by investment and export demand. Contrary firms include bofa (1.04), hsbc (1.05), and citigroup (1.06), who emphasize weak consumer demand and geopolitical risks. The Italian IP data bolsters the aligned case, as the contraction was narrow in scope.
Related pairs to watch are EUR/USD and EUR/CHF, as the former reflects the broader growth differential and the latter captures safe-haven flows amid geopolitical uncertainty.
No high-impact events are scheduled for Italy in the next 30 days. The next key catalysts for EUR/USD are the ECB meeting later this month and euro area composite PMI data, which will test the resilience narrative.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
Market implications
Watch EUR/USD for a test of the 1.06 level; a break above would target 1.065 resistance. The ECB meeting and euro area PMIs are the next catalysts. Positioning is neutral, but a sustained rally requires confirmation from services data.
Risks to this view
A sharper than expected slowdown in German industry or an escalation in Middle East tensions disrupting energy supply could reverse the resilience narrative. If consumer durables weakness spreads to investment goods, the bullish EUR/USD case would be invalidated.
Older quick take Quick take Published 10:31 Italy Italian industrial production posts a small contraction in May After three consecutive monthly gains, production took a breather in May. Resilience in the sector has been broadly confirmed, suggesting that industry will likely remain a growth driver in the second quarter, when GDP could still expand marginally Resilience in Italian industrial production is likely to bolster growth moving forward Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Paolo Pizzoli Senior Economist, Italy, Greece Both hard data and business surveys have so far pointed to industry as the most resilient part of the Italian economy over the first part of 2026, irrespective of the war in the Middle East and its impact on energy prices. Industrial production for May data just released by Istat seems to confirm that this remains the case; seasonally adjusted industrial production contracted by 0.3% on the month, a whisker more than consensus and our expectations.
This comes after three consecutive monthly gains, and leaves the quarterly gain seen in the March-May period at +0.9% from December-February. On a yearly basis, the calendar-adjusted measure is up 1.1% as of April. Looking at the breakdown by major aggregates, the pattern of the first months of the year is clear: production increased substantially in the investment goods domain (+4.2% over the same period of 2025), decently in intermediate goods and energy (+0.4%) and contracted in the consumer goods domain (-2.9%), particularly for durables (-8.9%).
The sector breakdown confirms a strong performance in the first five months of 2026 for transport equipment (+11.5%), with solid growth also visible in machinery (+2.8%) and computers and electronics (+2.8%) and a recovery in pharma (+3.4%), the undisputed leader over the course of 2025. At the other end of the spectrum, textiles (-4.8%), coke and refined products (-3.9%), chemicals (-3.5%) and other manufacturing (-4.8%) continue to lag. Looking ahead, the statistical carryover for the second quarter after May’s release has industrial production up 0.7% over the first quarter.
Based on available business surveys, a relatively flat June reading appears a good estimate, with a possible improvement down the road if signals of diminishing stocks of finished products are confirmed and improvements on the German industrial front materialise. We are not seeing evidence of a rapid acceleration in production, but rather of a tentative and gradual turnaround – similar to that seen at the beginning of the year before the outbreak of the US-Iran war. Translating this into GDP growth perspectives, the May industrial production release points to a positive contribution of industry to quarterly GDP growth.
This should only partially compensate for the negative contribution of services, likely reflected in softer consumption in the quarter. We continue to expect GDP growth to decelerate in the second quarter after a surprisingly strong +0.3% in the first, while remaining just marginally in positive territory. Our preferred profile for the second half of 2026 foresees a very gradual acceleration, with average Italian GDP growth for the whole of 2026 at 0.8%.
Content Disclaimer This publication has been prepared by ING solely for information purposes irrespective of a particular user's means, financial situation or investment objectives. The information does not constitute investment recommendation, and nor is it investment, legal or tax advice or an offer or solicitation to purchase or sell any financial instrument. Read more Older quick take
How we cover this story
Live cross-firm bank consensus across 30 desks — FX, oil & gold
View bank forecasts