ECB officials are splitting opinions on how much further the policy tightening cycle has to run. Economists at Société Générale do not expect the EUR/USD pair to reach new highs.

The speed of travel depends more on events in the US

“Speculation at what level the ECB will pause intensified after MNI quoted (centrist/dovish) ECB sources, saying at least one or two more 25 bps rate increases are likely over the summer.”

“Hawkish members last week warned rates could reach 4% in September, but the majority of the council still sees this as unlikely, barring an upside inflation surprise. One or two more increases probably won’t be enough to set pulses racing about new highs for the EUR/USD of about 1.11.” 

“Tactically, the speed of travel depends more on events in the US. This includes discussions about the debt ceiling between the President and Congressional lawmakers, which will reportedly resume today.”