ING: Tensions between the US and Iran boost expectations of ECB interest rate hikes, but the upside for the euro remains limited

Jinse Finance reported that on July 10, ING analyst Francesco Pesole stated that the recent military strikes between the US and Iran have increased market expectations for another rate hike by the European Central Bank, but the upside for the euro is limited. He pointed out that the renewed escalation of the conflict has caused the short-term EUR/USD swap spread to tighten again. “Although all this has injected new confidence into the previously fading expectations of a September ECB rate hike, the path for the euro to strengthen against the dollar amid this renewed escalation is rather narrow,” he said. He added that EUR/USD may stabilize on Friday as the market waits for more clarity on the situation, but there is a risk of falling below 1.14. (Golden Ten Data)