ECB Preview: Three scenarios and their implications for EUR/USD – TDS

FXStreet Insights Team FXStreet

Economists at TD Securities discuss the European Central Bank (ECB) interest rate decision and their implications for the EUR/USD pair.

Hawkish (5%): 25 bps hike & bias to Sep hike

No material change to the decision vs. June. 25 bps hike and no change to balance sheet policy. President Lagarde suggests that the base case should be a hike in September and that the data has to prove otherwise. EUR/USD +0.25%.

Base Case (70%): 25 bps hike & cautious language

No material change to the decision vs. June. 25 bps hike and no change to balance sheet policy. Lagarde remains ambiguous about September – if data supports it, then the Governing Council will hike. This isn't about surprises to the data vs the June projections, but a broader statement that puts the onus on macro-dynamics to justify a hike. Lagarde says that policy moves beyond September are purely a function of data. EUR/USD -0.15%.

Dovish (25%): 25 bps hike & high bar to further hikes

No material change to the decision vs. June. 25 bps hike and no change to balance sheet policy. Lagarde makes it clear that the data has to surprise to the upside (vs ECB June projections) to see a hike in September. In other words, while it's not impossible, there's a relatively high bar to it. She doesn't say that the ECB has reached its terminal rate, but that's the implication. EUR/USD -0.75%.

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

GBP/USD stays positive near 1.3450 after UK jobs data

GBP/USD recovers ground and tests 1.3450 in early Europe on Tuesday. The UK ILO Unemployment Rate remained at 4.9% in the three months to May, compared with expectations of 5%, but fails to provide any impetus to the British Pound's renewed uptick. Traders stay cautious amid US-Iran uncertainty and the UK political transition.

EUR/USD steadies above 1.1400, awaits German ZEW Survey

EUR/USD is consolidating above the 1.1400 mark in European trading on Tuesday. The pair lacks any directional impetus amid a subdued US Dollar price action and ahead of the German ZEW Survey.

Gold: Acceptance above 21-day SMA at $4,065 is critical for buyers

Gold is building on its recovery from two-week lows of $4,024 reached last Friday, extending the winning streak into a third straight day on Tuesday. XAU/USD is capitalizing on the ongoing pullback in Oil prices from monthly highs near $84.50. The black gold is retreating for a second day in a row on emerging signs of diplomatic efforts to ease the US-Iran conflict.

Shiba Inu price extends gains as on-chain and derivatives metrics confirm bullish bias

Shiba Inu extends gains, trading above $0.0000042 after breaking above the descending trendline the previous day. Strengthening on-chain data and improving derivatives metrics support further gains for the meme coin. CryptoQuant’s exchange netflow chart below shows five consecutive days of net outflows since July 17.

Brent nears a critical crossroads as the global economy faces one too

Markets spent last Friday digesting a Reuters report that Iran has told the Houthis to stand ready to close Bab el-Mandeb if the US strikes Iranian power infrastructure — missiles and drones are reportedly already positioned near the strait, awaiting the order from IRGC officers in Yemen.

US Dollar mid-year outlook: Exceptional currency, exceptional risks?

The US Dollar enters the second half of 2026 in a markedly different position from a year ago. The King currency has recovered, reflecting persistent US inflation, changing expectations for Fed policy, geopolitical tensions and renewed demand for defensive assets.