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EUR/USD pressured by European bond turbulence and ECB outlook

OCBC said markets are pricing slightly more than three Fed hikes over the next 12 months, a path it views as too aggressive.

Reported · Written up by our desk · Major Pairs

FXStreet cited OCBC strategists Sim Moh Siong and Christopher Wong saying EUR/USD is being pulled in opposite directions, with French political-fiscal risks weighing on the euro while the US dollar may be more capped.

They added that turbulence in European bond markets is driving expectations for a more dovish ECB, while rising US yields reflect economic resilience, even as recent labor data has softened.

OCBC noted that markets still price slightly more than three Fed hikes over the next 12 months, but argued this outlook appears too aggressive given signs of softer hiring and moderating wage growth.

The strategists said the sharp safe-haven demand that had supported the CHF late last week is fading, and they expect a moderate, not aggressive, USD rally into year end unless volatility in European bond markets escalates significantly.

Latest closeEUR/USD 1.122 ▼0.3%

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