The dollar maintains a bullish bias due to persistent inflation expectations and Fed policy, while the euro faces limited upside as the expected ECB hike is already priced in. Regional central bank policy divergences continue to drive volatility in CEE currencies.
Key Takeaways
- 1.The ECB's expected 25bp rate hike is fully priced into money markets, limiting the euro's upside potential.
- 2.The USD remains supported by expectations of a Fed rate hike by year-end despite lower US core CPI.
- 3.Diverging central bank policies in the CEE region are driving local currency performance.
Table of Contents
- FX Daily: Euro already prices a hawkish ECB
- USD: Dollar holds its bullish bias despite US core CPI
- EUR: A high bar for the ECB to lift the euro
- TRY: Hawkish tone remains
- CEE: Different central bank paths lead to different FX
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Authors
Chris TurnerFrantisek TaborskyFrancesco Pesole
Securities
EURUSDUSDJPY
Themes
Central Bank Policy DivergenceStagflationary Pressure
Regions
EuropeUnited StatesTurkeyCzech Republic
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