The market is still pricing in a few more rate hikes for the ECB and what is probably more decisive: ECB rate cuts are being priced in only very cautiously, but quite convincingly for the US.

No doubt we could argue whether the market’s view on the Fed is exaggerated, but the most recent inflation data illustrated that the ECB will have to do more or will have to maintain a restrictive monetary policy for longer. Even if a few doves amongst the ECB board members have recently commented the data is pointing in another direction (for now). And as the ECB will certainly not want to give cause to doubts that it is doing its job properly that is positive for EUR.