Euro: ECB guidance could keep range intact against US Dollar – DBS
Philip Wee at DBS Group Research expects the European Central Bank to keep its deposit rate unchanged while signalling a possible December hike. He suggests the ECB will use the breathing space from France’s rating affirmation to focus on its 2% inflation target.
DBS Group Research expects the European Central Bank (ECB) to maintain its deposit rate at 2.50% during its upcoming guidance, while signaling a potential hike in December. The bank's decision to keep rates unchanged is supported by the recent upgrade of France's sovereign debt rating by Moody's to Aa3, providing the ECB with a window to focus on its 2% inflation target.
ECB President Christine Lagarde is expected to deliver a balanced message that reinforces the ECB's commitment to fighting inflation without appearing complacent about France's fiscal challenges. This measured approach is anticipated to help stabilize the EUR/USD exchange rate within the current range of 1.11-1.13. As the US Dollar shows relative weakness following the Federal Reserve's decision to keep rates unchanged and amid mixed economic data, market participants are closely monitoring the ECB's policy stance and the upcoming US macroeconomic releases for further guidance on the currency pair's direction.
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