ECB Hawkish but EUR Still Weaker vs USD – OCBC

OCBC strategists Sim Moh Siong and Christopher Wong observe that the European Central Bank held rates steady in July and is expected to deliver at least one more 25 basis point hike to 2.50% in September. Despite this hawkish posture, the analysts highlight that rising energy prices still tilt the terms of trade in favor of the US dollar, leaving the euro at a disadvantage.

The divergence in energy costs continues to support the greenback, weighing on EUR/USD. The outlook remains skewed toward dollar strength unless European energy dynamics shift significantly.