The European Central Bank's Sintra forum today sees the introductory speech and press conference by Christine Lagarde. With markets pricing in 150 bps of ECB tightening by year-end, the EUR/USD pair is unlikely to break higher, economists at ING report.

A high bar for hawkish surprises in Sintra

“Lagarde is expected to provide some colour on how seriously the ECB is considering a 50 bps rate hike in September in light of recent activity survey pointing at a rapidly deteriorating picture for the eurozone. Also, more details of the anti-fragmentation tools discussed earlier this month will likely be addressed.”

“A look at rate expectations embedded in the swaps market – 150 bps of tightening fully in the price by year-end – suggests that the bar for a hawkish surprise is likely set quite high, and we doubt that Sintra will be the catalyst for a significant break higher in EUR/USD.”

“A softer dollar environment could help a move and stabilisation in the 1.0600-1.0650 range this week, even if we see a return to 1.0500 in the remainder of 3Q as more likely.”