EUR/USD flows - tests the big figure out of dovish additions
ECB statement adds a few dovish provisos, as per recent tone shifts, looking to cement a more cautious view
Suggests while energy remains a concern, starting to weigh up pace and extent of tightening and need to judge its impact
Dec continuation probabilities easing
As had seemed the risk, ECB statement coming across as somewhat more dovish, both calling out the broad stability of underlying inflation and wages, and namechecking the tightening of financial conditions, likely to weigh on inflation and growth, as per Lagarde’s recent comments. Dec hike odds slipping into the 60%s from the fairly recent 80%s, as the shifting balance points to a more cautious attitude towards further tightening of conditions, and at pace.
EUR/USD manages to fractionally extend the lows to almost tag the big figure psychological level of 1.11 that offers obvious support. While some fast money shorts prepositioning for the fairly predictable tone shift may book intraday profits, pressure and technical skew does still remain downwards, unless a good covering move through 1.115/2 can be mustered.