We have heard a more moderate tone by some of the ECB’s most prominent hawks lately, and the ever-deteriorating Eurozone activity outlook is definitely clashing against stubbornly hawkish rhetoric despite signs of sticky core inflation. Still, markets appear reluctant to move on speculation. For now, they've preferred to keep expectations close to two rate hikes (43 bps) as EUR/USD has held above 1.1200 thanks to the Dollar’s still softish momentum.

We still see room for the overvalued EUR/USD (in the short-term) to correct lower before the end of the week, with a move back to the 1.1150/1.1170 region as a first step.