ECB’s Panetta: Still a long way from the neutral rate

Dhwani Mehta FXStreet

European Central Bank (ECB) executive board member Fabio Panetta said on Tuesday that the central bank is “still a long way from the neutral rate.”

Additional comments

If domestic demand remains weak, inflation could fall well below 2%.

The ECB should move to neutral monetary policy stance, or even expansionary if necessary.

Eurozone economic activity remains weak, no turning point in sight for beleaguered manufacturing sector.

The tightening bias in our official description of the monetary stance is no longer necessary.

The ECB should return to more traditional, forward looking approach to monetary policy.

Directional guidance from the ECB would help consumption and investment.

The ECB needs to give more explicit indications of its rate policy intentions.

Market reaction

EUR/USD was last seen trading at 1.0566, losing 0.31% on the day.

Author

Dhwani Mehta

FXStreet

Residing in Mumbai (India), Dhwani is a Senior Analyst and Manager of the Asian session at FXStreet. She has over 10 years of experience in analyzing and covering the global financial markets, with specialization in Forex and commodities markets.

GBP/USD tumbles to three-day lows around 1.3420

GBP/USD comes under extra selling pressure and revisits the area of multi-day lows near 1.3420 in quite a bearish start to the week. Cable’s decline comes amid the firmer Greenback as investors continue to assess developments in the US-Iran conflict. Moving forward, attention will turn to the UK employment report on Tuesday.

EUR/USD meets some initial contention around 1.1400

EUR/USD keeps the bearish bias well in place, slipping back toward the 1.1400 region, where some initial support appears to have turned up. The auspicious start to the week of the US Dollar has kept the risk complex under pressure as investors has continued to closely follow developments from the Middle East conflict. The release of the ZEW Economic Sentiment in the Euroland and Germany are next on tap on the domestic calendar.

Gold holds above $4,000 as inflation-driven Fed hike bets cap upside

Gold holds steady above $4,000 during the Asian session on Tuesday, though the upside potential seems limited. Inflation fears stemming from elevated oil prices reaffirm bets for higher US interest rates, which, along with an escalation in the Middle East war, continue to underpin the safe-haven US Dollar. This should act as a headwind for the non-yielding bullion, warranting caution for bullish traders before positioning for any meaningful gains.

Bitcoin climbs above $65K as ETF flows recover despite rising macro risks

Bitcoin (BTC) has climbed above $65,000 on Monday as improving onchain activity, recovering US spot Bitcoin exchange-traded fund (ETF) flows, and stabilizing derivatives point to a more balanced market, according to Glassnode.

Here's where the Canadian Dollar is headed next: 4 bearish scenarios and a bullish one

The Canadian Dollar (CAD) has ridden a volatile first half of the year, with Oil prices surging and then falling as markets danced to the Middle East’s tune. Neither the Bank of Canada nor the Federal Reserve has changed rates so far this year, and the USD/CAD's next move may depend on which of the two banks fails to deliver what markets expect.

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.