EUR: US Factors Drive Market, ECB Faces Challenges in Conveying Hawkish Stance

EUR: Another day driven by the US

EUR: Another day driven by the US

As discussed in our June ECB Cheat Sheet, we see developments in USD rates as more impactful in the long run for EUR/USD compared to what might emerge from tomorrow’s ECB meeting.

In terms of short-term impact, we expect the combination of a hawkish hold by the Fed and a hawkish 25bp hike by the ECB to leave EUR/USD trading closer to 1.0700 than 1.0800 as we expect the FOMC to offer reasons to stay attached to dollar longs. The ECB may struggle more to convey a hawkish message after inflation and growth data came in on the softer side.

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Topics

inflation eur us ecb eur/usd fomc hawkish hold USD rates June ECB Cheat Sheet long run short-term impact 25bp hike dollar longs growth data hawkish message softer side.

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