Euro Upside Capped by Fed Story, Softer Inflation – ING

Chris Turner of ING notes that softer Eurozone inflation and uncertainty surrounding a potential September ECB rate hike are limiting the euro's appreciation against the US dollar. While the market still prices in about 15 basis points of tightening, the expiration of certain subsidies could add upward pressure on prices.

The Fed's narrative continues to weigh on EUR/USD, with the dollar retaining strength. Turner's analysis suggests that near-term gains for the single currency are constrained by these mixed signals.