U.S.-Iran Military Escalation Pushes ECB Rate Hike Expectations, But Euro Upside Limited: ING

ING0.12%
EURUSD-0.21%
According to ING analyst Francesco Pesole, as reported by Jin10, recent U.S.-Iran military escalation has boosted market expectations for another European Central Bank rate hike, though the euro's upside remains constrained. The renewed conflict has driven EUR/USD short-term swap spreads to retighten. "While this gives fresh confidence to September ECB rate hike expectations that had been fading, the path for EUR/USD to strengthen from this latest escalation is quite narrow," Pesole said. The analyst noted the euro may stabilize Friday as markets await clarity, but faces downside risk toward 1.14.
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