EUR: Everyone loves the Euro – ING

The Euro (EUR) has been doing well this week and seems to be the big winner from the de-dollarisation story, ING's FX analyst Chris Turner notes.

1.1550/1600 area is the top of a trading range

"A slightly more hawkish ECB has helped here, as has some weakness in the currencies of key trading partners, such as the UK. On the calendar today are a lot of ECB speakers. Probably up for discussion is whether the ECB needs to cut rates again in September. Price data and the ECB's wage tracker data suggest the ECB does have room to cut. And the market just about prices a cut for December."

"As above, we do note that EUR/USD is trading way above levels justified by short-dated interest rate differentials. Our baseline remains that this 1.1550/1600 area is the top of a trading range – unless those rate differentials can have a big move in favour of the Euro. But we do note the prevailing narrative on de-dollarisation and would not advocate aggressively fighting this dollar bear trend at these levels."

"Elsewhere, it's not something that the spot FX market typically looks at, but we have a very timely European conference today on financial integration. The ECB and European politicians are keen to push the 'global Euro' debate, but holding the Euro back is the incomplete capital markets union. Today's conference, 'Advancing the Savings and Investments Union', will seek to cover those remaining 'To Dos', and any new developments here might get greater coverage than usual."