Euro: Schnabel’s upbeat tone supports against US Dollar – ING

Chris Turner at ING highlights that Eurozone data continue to surprise positively and ECB’s Isabel Schnabel now sees growth risks possibly to the upside. This supports expectations for a 25bp rate hike to 2.50% in September and another move next year, with EUR/USD expected to hold 1.1650/60 support and move towards the 1.1700/1710 area.

Resilient growth supports Euro upside

"Eurozone data releases continue to surprise to the upside. And what is the big surprise is how resilient the eurozone economy has been in the face of this year's rise in energy prices."

"In fact, the ECB's Isabel Schnabel has today suggested that at September's meeting, the ECB might have to characterise growth risks to the upside."

"These comments should cement expectations for a 25bp rate hike to 2.50% at the September meeting and can probably retain market pricing of another 25bp hike into early next year."

"As a procyclical currency, better growth prospects are obviously good news for the euro and barring any upside surprises with the US core PCE data today, we favour EUR/USD holding support at 1.1650/60 and heading back to the 1.1700/1710 area."