With Fed officials pushing back against the recent dovish re-pricing, we think there is a bit more room for this EUR/USD correction to go.

Markets have added about 20 bps of easing into the EUR OIS curve by mid-2024 over the past couple of weeks. However, unlike the Fed, the dovish ECB repricing is based on more solid evidence of an economic slowdown, meaning it should be harder for ECB members to convince markets to price out cuts.

EUR/USD may continue its gradual return towards 1.0600/1.0650 in the coming days.