We had been caught off guard by the primary message from ECB President Christine Lagarde yesterday that the easing cycle was nearing its conclusion, ING’s FX analyst Chris Turner notes.
1.1330/1350 would be the restrict of the EUR/USD sell-off
“The terminal price for the ECB easing cycle was subsequently priced 11bp greater, with 1m EUR ESTR priced one yr ahead now at 1.71%. This compares to the acute of 1.40% in mid-April. The market nonetheless costs an extra 25bp ECB lower later this yr, however this has now been pushed again to October from September. ECB confidence within the modest development cycle into 2026 and 2027 is a modest euro-positive.”
EUR/USD got here near 1.1500 on these Lagarde remarks yesterday. As above, we’ll want fairly a tender set of US information at this time to interrupt that 1.1500 barrier above which the April 1.1575 excessive comes into play. We suspect 1.1330/1350 would be the restrict of the EUR/USD sell-off ought to US information not be as weak because the market is positioned for.
