EUR: Trades under 1.09 after the ECB keeping rates on hold – DBS

EUR/USD dips slightly under 1.09. ECB kept rates on hold as expected and left a September rate decision ‘wide open’ and data dependent, DBS FX & Credit Strategist Chang Wei Liang notes.

ECB to lean towards caution

“EUR/USD dipped slightly under 1.09, with the ECB keeping rates on hold as expected and leaving a September rate decision ‘wide open’ and data dependent. ECB President Lagarde hinted that another cut is possible if the data ‘confirms the disinflationary process’, and market expectations had not budged from largely expecting a cut in September.”

“Meanwhile, fractious French politics and possible disagreements over the budget could weigh on consumption and investment, adding another reason for ECB to lean towards caution.”