Euro: Range against US Dollar could hold on ECB guidance – DBS

EUR/USD is seen holding its recent 1.11–1.13 range. A balanced message from Christine Lagarde is expected to support that stability. According to Philip Wee at DBS Group Research, the European Central Bank is likely to leave its deposit rate unchanged but signal that a December hike remains possible. He suggests that France’s rating affirmation gives the ECB breathing space to concentrate on its 2% inflation target.

ECB policy keeps Euro trading range anchored

"Today, the European Central Bank is likely to leave its deposit facility rate unchanged at 2.50%, while keeping the door open for a December hike."

"The ECB is likely to seize the breathing space afforded by Moody’s affirmation of France’s Aa3 sovereign debt rating to prioritise the return of inflation to its 2% target."

"ECB President Christine Lagarde will need to reinforce the ECB’s inflation-fighting credentials without appearing complacent about France’s fiscal vulnerabilities."

"A balanced message should help stabilize EUR/USD within this month’s 1.11-1.13 trading range."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Learn more.)