ECB Maintains Hawkish Stance with Expectations for Additional Rate Hike by September

The European Central Bank (ECB) continues to hold a hawkish bias, with markets anticipating one more interest rate increase by September despite prevailing uncertainties. According to FX Street (ING), reduced sensitivity to oil prices and ongoing economic uncertainty are key factors preventing the ECB from shifting to a more dovish stance.

FX Street (Scotiabank) noted that the EUR/USD pair has softened amid regional inflation data suggesting downside risks for national consumer price indices. Nevertheless, ECB President Lagarde’s comments indicate that further tightening measures remain possible. Market swaps are currently pricing in modest additional tightening by September.

For Japanese investors closely watching global central bank policies, this hawkish outlook from the ECB could influence risk sentiment and currency flows, particularly in the EUR/JPY and USD/JPY pairs.