Data has rapidly moved against the ECB's September messaging, and we and the market now expect a rate cut at the October meeting. Governing Council members have leaned into the cut too, TDS macro analysts note.

A rate cut at the October meeting almost imminent

“Markets are well priced for an October cut. On rates side, we doubt the ECB will provide much in terms of new information to change the current dynamics.”

“The ECB is unlikely to be a meaningful driver for the EUR. We think that a reassessment of the global data narrative, Fed pricing, and positioning adjustments will be much larger drivers of FX. We remain short EUR/USD in options.”