Markets remain aligned with European Central Bank (ECB) hawks, who see little scope for further rate cuts despite dovish voices calling for flexibility, ING’s FX analyst Francesco Pesole notes.
EUR/USD seen anchoring near 1.170
“Despite some scattered calls for retaining flexibility by ECB doves after the December meeting, markets remain aligned with hawks like Isabel Schnabel, who has clearly pointed out that further cuts are unlikely in the foreseeable future.”
“EUR/USD remains driven by the dollar leg for most of it. The US’s increasingly hawkish narrative on Greenland is surely a frontier risk to keep an eye on. EUR/DKK is an interesting gauge to monitor in this sense. It’s already trading on the strong side relative to the peg, which would likely need to be defended with heavy intervention should the US move militarily in Greenland.”
“Barring escalations on that end, we think EUR/USD may build an anchor around 1.170 in the near term.”
Source: https://www.fxstreet.com/news/eur-ecb-hawks-hold-line-as-rate-cuts-fade-ing-202601060921
