FX Daily: No doves in Sintra
At a Glance
The desk anticipates a hawkish tone from ECB officials at the annual Sintra forum, reinforcing expectations of an interest rate hike this year. Per the full note from the research team at ING, ECB President Christine Lagarde's opening remarks have set a constructive tone, likely echoed by other speakers. Today's US data, particularly an expectation of a stronger consumer confidence print at 97.5, may further support the dollar as overall bullish momentum depreciates. With the current EUR/USD spot at 1.1700, traders should be aware of how market sentiment could shift based on further ECB communications and upcoming economic data.
Key Takeaways
Full Analysis
What the desk is arguing
The desk believes that commentary from the ECB at Sintra will uniformly support market expectations for an additional rate hike this year. This outlook is bolstered by recent remarks from Lagarde, which hinted at ongoing monetary tightening. The latest expectations also coincide with USD momentum weakening amidst improving risk sentiment and a recovery in equities, reflecting the delicate balance between these influential global factors.
Key US data releases today, including consumer confidence metrics expected to print well above consensus at 97.5, will shed light on the resilience of consumer spending. This backdrop may further bolster the dollar, should the data align with the desk's expectations and challenge the bearish sentiment surrounding it. However, USD/JPY remains at intervention levels, emphasizing the precarious position of the yen, particularly with significant central bank policy divergence.
Where it sits in our coverage
Our current consensus target for EUR/USD is 1.1700, with a range spanning from 1.1200 to 1.2000. Notable Dec-26 forecasts include: - hsbc: 1.1800 - jpmorgan: 1.1800 - goldman: 1.2000
The desk's assessment aligns with the upper range of current market expectations, highlighting confidence among select firms regarding further EUR strength as the ECB maintains hawkish messaging.
Market Implications
Traders should monitor the upcoming data releases, particularly today's consumer confidence figures, which could dictate short-term dollar movements. Additionally, any further hawkish signals from ECB officials can prompt a bullish shift in EUR pricing, particularly against the dollar near 1.1700.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Société Générale | Bearish | 1.1400 |
Scotiabank | Bearish | 1.1200 |
Commerzbank | Bullish | 1.2200 |
From the original
Articles FX Daily: No doves in Sintra 07:55 FX Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download We expect communication by ECB speakers in Sintra to broadly endorse expectations for another hike this year after Lagarde’s measured opening remarks.
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FX Daily: Euro already prices a hawkish ECB
The desk believes that the euro is pricing in a hawkish European Central Bank (ECB), with today's anticipated 25 basis point rate hike fully reflected in market expectations. The commentary highlights that aggressive tightening predictions for the ECB are making it difficult for the euro to rise, pointing out a current market sentiment that favors a relatively strong dollar, particularly after the muted US May CPI results. Per the full note from ing-think, with the euro trading at 1.1679, the consensus estimates reflect targets ranging from 1.1200 to 1.2000 into 2026. The upcoming May PPI data will be critical as it is expected to influence short-duration interest rate expectations in the US, potentially feeding into the dollar's bullish stance as we approach next week's FOMC meeting.