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Dovish ECB-Speak Applies Light Pressure

EUR
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ECB-speak applies some modest weight to the EUR via yield differentials (expect exacts on STIR movement to follow shortly), although ranges remain tight, leaving previously covered technical levels in EUR/USD untouched (resistance 1.0895, support 1.0805).

  • EUR/USD slides to 1.0841 from ~1.0860 pre-Lane, before recovering to the 1.0850 area, printing little changed on the day.
  • ECB chief economist Lane notes that the breadth of the domestic inflation dynamic is narrowing, while pointing towards moderating wage growth pressures since late ’23 (based on the Bank’s wage growth tracker).
  • Lane also warns on the risks of keeping policy restrictive for too long, while stressing that the bulk of the impact of the current tightening cycle will be relatively backloaded.
  • Elsewhere, BdF Governor Villeroy (seen as an influential centrist) pushes back on the idea that the ECB could not move in back-to-back meetings, highlighting the need for “maximum optionality,” albeit with data dependence stressed.
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ECB-speak applies some modest weight to the EUR via yield differentials (expect exacts on STIR movement to follow shortly), although ranges remain tight, leaving previously covered technical levels in EUR/USD untouched (resistance 1.0895, support 1.0805).

  • EUR/USD slides to 1.0841 from ~1.0860 pre-Lane, before recovering to the 1.0850 area, printing little changed on the day.
  • ECB chief economist Lane notes that the breadth of the domestic inflation dynamic is narrowing, while pointing towards moderating wage growth pressures since late ’23 (based on the Bank’s wage growth tracker).
  • Lane also warns on the risks of keeping policy restrictive for too long, while stressing that the bulk of the impact of the current tightening cycle will be relatively backloaded.
  • Elsewhere, BdF Governor Villeroy (seen as an influential centrist) pushes back on the idea that the ECB could not move in back-to-back meetings, highlighting the need for “maximum optionality,” albeit with data dependence stressed.