Euro: Sintra seen validating hike expectations – ING

ING’s Francesco Pesole writes that European Central Bank (ECB) President Christine Lagarde’s opening remarks in Sintra were measured and do not signal a radical shift in policy communication. Pesole expects other ECB speakers to broadly validate market pricing for another hike this year and prefers EUR/USD stabilisation above 1.140.

ECB communication supports steady Euro outlook

"We argued yesterday that ECB President Christine Lagarde didn’t look likely to use Sintra for a radical change in policy communication. And indeed her opening remarks yesterday were quite measured. She said that the ECB response doesn’t need to be as forceful as it was in 2022-2023, but also that the economy has grown resilient."

"There is little here to prompt markets to revise expectations for another hike this year. We expect other ECB speakers this week to broadly validate that pricing, even as yesterday’s eurozone sentiment indicator showed signs of easing inflationary pressures."

"We acknowledge downside risks for EUR/USD ahead of US data and Warsh's speech in Sintra, but remain more in favour of stabilisation around or just above 1.140 rather than a retesting of last week’s lows in the coming days."

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