EUR flows: ECB Lane Hints at Gradual Cuts

ECB Lane reported comments is helping positive EUR sentiment, with newswires highlighting Lane Jackson Hole comments that the return to the inflation target is not yet secure and that the monetary stance needs to stay in restrictive territory for as long as needed.  However, Lane also noted that a rate path that is too high for too long would deliver chronically below target inflation.  This is all consistent with a 25bps September and December cuts from the ECB, but no more.  This is certainly at a slower pace than our Fed view (3 cuts before year end) and market perceptions that in the next 3-6 months that the Fed will ease quicker than the ECB.  This can be enough to keep the squeeze on EUR shorts and build for a test of 1.1275 this week.