EUR/USD: Hawkish rhetoric by the ECB point to upside risks in the near term – ING

Economists at ING expect the EUR/USD pair to test the 1.0900/1.0950 area as ECB squashed market expectations of smaller rate increments.

ECB dovish speculation didn’t last long

“The ECB provided a very reasonable amount of pushback against reports earlier this week that suggested 25 bps increases were being considered. Christine Lagarde reiterated her recent hawkish rhetoric yesterday and the minutes from the December meeting all but confirmed the growing pressure from the hawks in the governing council.”

“This is good news for the Euro, and as long as US data remains on the soft side, EUR/USD should benefit from a rather supportive rate differential.”

“A test of 1.0900/1.0950 next week looks on the cards, but things may be rather quiet today since the Eurozone calendar is quite empty and Christine Lagarde should not surprise with anything new as she speaks again in Davos.”