Euro: Range-bound against US Dollar under Fed support – ING

ING’s Chris Turner says EUR/USD is consolidating above 1.1400 as markets reassess European Central Bank (ECB) and Fed paths, with a September ECB hike priced below 50% probability. He expects ECB speakers to stress lingering inflation risks, sees Dollar strength on the Fed story, and looks for EUR/USD to stay offered in the 1.13/1.14 area with resistance at 1.1475.

ECB speakers and capped EUR/USD topside

"EUR/USD is consolidating above 1.1400 as the market considers the next move for central bank policy expectations and keeps one eye on geopolitics and equity market sentiment. "

"A September rate hike from the European Central Bank is now priced with less than a 50% probability, but it is too early for the ECB to sound the 'all-clear' on inflation, given the risk that core inflation could still edge higher over the coming months."

"Expect that message to come through from ECB speakers this week, including heavy hitters such as Isabel Schnabel and Philip Lane."

"As above, we can see the dollar edging a little higher this week on the Fed story and would assume that EUR/USD resistance at 1.1475 now limits the topside."

"We have a bias that EUR/USD can stay offered in the 1.13/14 area until it becomes much clearer that the Fed does need to hike rates after all. That is the house view, but it may not become clearer until the end of the quarter."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)