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EUR/USD Through Support Despite ECB Members Talking Up Inflation Concern

EUR
  • USD's yield-inspired run higher here resulting in EURUSD breaking through 1.0805 support to extend below the April lows of 1.0788.
  • Run lower in the pair comes despite more hawkish rhetoric from both de Guindos as well as Estonia's Muller today - who flagged concerns over services prices and talked against market pricing of potential rate cuts in early'24.
  • Markets remain relatively well priced for two further 25bps rate steps, topping out at a 3.75% peak rate (infitting with our exclusive posted Monday: MNI SOURCES: Most At ECB See 4% Rate As Only Outside Chance )
  • Technically, the current pullback is still considered corrective - turning focus to 1.0737, the 61.8% retracement of the Mar 15 - Apr 26 bull run and 1.0713, the Mar 24 low. With little data left this week, comments from Schnabel, Lagarde & de Cos will be eyed Friday.

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