Euro: ECB hike view supports range against US Dollar
Danske Research Team notes that EUR/USD remains steady near 1.1650 as markets reassess the ECB outlook. August inflation indicators are expected to show firmer headline inflation but contained underlying price pressures, supporting Danskes view of a final 25bp ECB rate hike in September followed by an extended pause, with the deposit rate seen at 2.50% through 2027. Pair steady with ECB path repriced “In the euro area, the first indications of August inflation are released, starting with France and Spain. We expect euro area inflation to rise to 3.4% y/y from 3.0% y/y, while core inflation is expected to remain unchanged at 2.5% y/y. The increase should be driven entirely by energy inflation, as pump prices are up 5% m/m for gasoline and 8% m/m for diesel. Core inflation momentum should remain muted, as also suggested by the PMI price components. ” “Furthermore, we await the European Commission‘s business survey for the euro area in August, with focus on firms’ selling price expectations. These have declined in recent months after rising in March and April. With services expectations now back at pre-war levels, further declines should reduce expectations for more than one additional 25bp ECB rate hike.” “In the euro area, the ECBs July









