EUR: Dovish ECB could keep Euro gains in check – ING

The ECB is widely expected to cut rates by 25bp today. This will take the deposit rate to 2.00%. The market currently prices a further 25bp cut by the 30 October meeting. There's a risk of the pricing of the next cut, after today, being brought forward to the 11 September meeting, ING's FX analyst Chris Turner notes.

EUR/USD can go back to the 1.1330/1360 area today

"The ECB is widely expected to be dovish today. And there could be some big downward revisions to the inflation forecasts, which would argue that the policy rate needs to go below neutral and into the accommodative area. Currently, the 1m EUR ESTR rate priced one year forward sits at 1.60%. This could easily dip back to the 1.50% area and had seen 1.40% priced amid the April trade tumult."

"The Euro has been a slight laggard in the soft USD environment, and actually the G10 commodity currencies have been the best performers against the USD over the last week. A dovish ECB today could briefly send EUR/USD back to the 1.1330/1360 area today, but we would expect more buying to emerge there ahead of what could be USD bearish NFP release tomorrow."