EUR/USD Supported by Narrowing US-Eurozone Rate Differentials, Though Oil Prices May Limit Gains: ING

EURUSD-0.44%
According to Francesco Pesole, an analyst at ING, on July 14, narrowing short-term rate differentials between the US and eurozone are providing support for EUR/USD. With market expectations for European Central Bank rate hikes cooling, eurozone short-term rates have room to recover, bolstering euro strength. However, rising energy prices could constrain this support. Given the ECB's cautious stance and the negative impact of higher oil prices on trade conditions, markets may struggle to price in expectations for more than two ECB rate hikes by year-end.
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