FX Daily: No doves in Sintra
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.
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.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Expect ECB speakers at Sintra to solidify rate hike expectations.
- 02US consumer confidence data projected at 97.5 may support the dollar.
- 03Improving risk sentiment is weighing on USD bullish momentum.
- 04USD/JPY remains sensitive to potential intervention from Japanese authorities.
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.
Risks to this view
A significant miss on today's consumer confidence data could undermine USD strength, potentially forcing a reversal in the current bullish sentiment around the dollar. Additionally, if ECB speakers tone down their hawkish stance or indicate a pause in tightening, it may lead to a more dovish outlook for the euro.
EUR/USD — All Desk Targets
| Firm | Stance | YE 2026 |
|---|---|---|
Société Générale | Bearish | 1.1400 |
Scotiabank | Bearish | 1.1200 |
Commerzbank | Bullish | 1.2200 |
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. The dollar has continued to hand back some gains, with focus on data today ahead of Warsh's Sintra speech tomorrow, which is expected to be hawkish. USD/JPY remains in FX intervention territory Frantisek Taborsky , Francesco Pesole and Chris Turner Yesterday marked the opening of the ECB's annual forum on central banking in Sintra, Portugal USD: Momentum keeps fading into key data and Warsh The dollar has continued to hand back recent gains against most G10 currencies, largely thanks to a recovery in equities.
Added support for risk sentiment has come from news that the US and Iran will start a new round of negotiations despite weekend skirmishes. This second factor, however, seems to be weighing on oil currencies (the Australian dollar, Canadian dollar, and Norwegian krone), which are lagging alongside the yen (more below). Still, we discuss here how the oil drop looks overdone, and we still expect gains in AUD and NOK this summer as moderately higher energy prices pair with attractive carry.
Focus today turns to US data. Our macro team looks for a well above-consensus 97.5 print in consumer confidence (vs 94.5), supporting the narrative of resilient spending. By contrast, JOLTS openings should fall in May, with our forecast at 7.25m against a 7.3m consensus.
This should not materially challenge the signal of a healthy labour market, particularly with the vacancies-to-unemployed ratio remaining above 1.0. Overall, we see a neutral to moderately positive impact on the dollar from today’s data. But USD bullish momentum has clearly faded, and improved risk sentiment argues against another sharp leg higher for now, at least until Fed Chair Kevin Warsh’s Sintra speech tomorrow and Thursday’s jobs data provide clearer direction.
Francesco Pesole EUR: Sintra unlikely to rock the euro We argued yesterday that ECB President Christine Lagarde didn’t look likely to use Sintra for a radical change in policy communication. And indeed her opening remarks yesterday were quite measured. She said that the ECB response doesn’t need to be as forceful as it was in 2022-2023, but also that the economy has grown resilient.
There is little here to prompt markets to revise expectations for another hike this year. We expect other ECB speakers this week to broadly validate that pricing, even as yesterday’s eurozone sentiment indicator showed signs of easing inflationary pressures . CPI flash estimates for June are being published this week in the eurozone.
Sources & References
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