The euro got a boost from Kazaks' remarks yesterday here and a further nudge higher today following de Guindos' comments here. Both are hinting at a possibility of a July rate hike but that is still three months away and that is a long time in central bank world.
Add to the fact that the ECB prefers to want flexibility more than anything else, it's weird to think that policymakers would pre-commit to anything at this point in time.
Nonetheless, the euro is getting a nudge higher as money markets are pricing in a potentially more aggressive policy move by the ECB. Three 0.25% rate hikes are priced in for year-end now and that is helping to see EUR/USD push up to near 1.0900:
Buyers are back in near-term control but just be wary that there are large option expiries rolling off today for the pair at 1.0900-05, so that could keep a lid on price action for now.
Besides that, I don't know how much conviction there is for the market to really chase or price in such aggressiveness by the ECB. So far, we're hearing from two policymakers - Kazaks definitely has a more hawkish leaning but de Guindos tends to follow Lagarde closely and is more cautious in some sense.
So, for him to talk up a July rate hike is something. But we have to see whether there will be any follow through conviction in the weeks ahead by other policymakers and from Lagarde herself preferably.
Going back to EUR/USD, the 38.2 and 50.0 retracement levels @ 1.0921 and 1.0971 respectively may offer some notable resistance in limiting any upside push amid a mostly firmer dollar. It definitely will take a more hawkish ECB to really convince of a push above 1.1000 at this point in time.
