And that is what is weighing on the euro at the moment. In case you missed the decision post earlier, I'll summarise the change below. In June, they said that:
"The Governing Council’s future decisions will ensure that the key ECB interest rates will be brought to levels sufficiently restrictive to achieve a timely return of inflation to the 2% medium-term target and will be kept at those levels for as long as necessary."
Meanwhile, in July now they are saying:
"The Governing Council’s future decisions will ensure that the key ECB interest rates will be set at sufficiently restrictive levels for as long as necessary to achieve a timely return of inflation to the 2% medium-term target."
The difference being that in June, they were still able to pre-commit to a further rate hike. But now, they can't really do so for September and the language reflects that. I would expect Lagarde to reaffirm that they may still hike again after the summer but as things stand, that is certainly not going to be a given like the decision today.
EUR/USD is down slightly from 1.1125 to 1.1100 currently while euro area bond yields are also slumping with 10-year German bond yields now down 5 bps to 2.40%.
