ECB President Christine Lagarde reiterated the need for caution when discussing monetary easing yesterday. The emphasis one once again put on wage pressures, confirming our view that the ECB will want to be reassured that wage growth is under control before starting to cut. We still think markets are right to price in a first cut in June, but are overestimating the size of total easing, which we expect to be 75bp vs 115bp priced in.

Anyway, the good EUR/USD momentum is a mere reflection of the dollar correction. We feel EUR/USD can stabilise around current levels today, but still faces some downside risks in the short-term, in line with our dollar call. The eurozone calendar only includes a speech by Isabel Schnabel (likely to echo a rate cut pushback) this morning.

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