Euro: Hawkish ECB offers limited support against US Dollar - ING
ING’s Francesco Pesole highlights that recent European Central Bank commentary remains broadly hawkish, with limited pushback from the dovish camp.
The European Central Bank (ECB) has presented a predominantly hawkish stance, with limited resistance from dovish members, according to ING's Francesco Pesole. Despite this, ING still perceives downside risks to the Euro (EUR) due to potential further rises in US interest rates and a broader backdrop of commodities and risk factors.
A near-term risk level of 1.140 for EUR/USD has been identified, with EUR/USD potentially testing this level. ECB members have begun public appearances again, with three policymakers delivering policy-related remarks yesterday. Gabriel Makhlouf, considered neutral-to-hawkish, indicated that every meeting presents an opportunity for an October rate hike; Ante Zigman emphasized growth resilience and the need to reduce inflation.
Olli Rehn, one of the Governing Council's most dovish voices, was neutral but did not oppose market expectations, highlighting the weakness of the dovish camp. All three policymakers stated there is no evidence of second-round effects, which contradicts the hawkish narrative and guidance. Despite this, ING does not anticipate a change in tone in the near term, suggesting restraint in aggressively selling EUR/USD from current levels.
However, front-end US rates could still rise, especially around key data releases, while the broader commodity and risk backdrop continue to pose downside risks to EUR/USD.
Written by urgent.news from FXStreet's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
This story
This is one outlet's version. Read the fullest account.
