Waiting for ECB Monetary Policy Meeting Accounts – ING

EUR/USD remains under pressure for the reasons we discuss above, ING’s FX analyst Chris Turner notes.

EUR/USD can break down to the 1.0800 area

“In focus today will be the release of the ECB minutes from the 11-12 September meeting when the ECB cut rates by 25bp but provided no forward guidance. Since then, we’ve seen a terrible set of September PMI data across the region and ECB speakers have acknowledged dwindling inflation risks and increasing growth risks.”

“Hence the market is now fully pricing 25bp rate cuts in October and December and keeping those EUR:USD swap differentials wide. It seems unlikely that today’s release of the minutes can scale back expectations for an ECB rate cut next week – but let’s see.”

“EUR/USD remains soggy. Technically it looks like it can break down to the 1.0800 area. But we’re not sure US short-dated yields will be the trigger since these have come a long way quite quickly. What would be a trigger is higher energy prices and that’s why tension in the Middle East could demand a greater risk premium of the euro.”