EURUSD W1 15-04

For all the talk in wanting to fight against inflation, the ECB certainly isn't hinting at much conviction. The key word yesterday was flexibility as the ECB wants to be able to be afforded policy options and not be cornered into hiking rates as soon as possible.

Lagarde's press conference made that clear when she said that rate hikes could come any time between a week or a few months after APP purchases end, which is still believed to be scheduled for Q3.

It's not like we weren't warned. *coughs*

The lack of conviction certainly leaves little room for a potential move in July, although ECB sources reported that it may still be on the table. But given the tight turnaround time, it could be unlikely unless inflation threatens to surge much higher. And even then, we may still see policymakers sit on their hands.

As for the euro, it's hard to find much optimism for the time being. With a central bank that isn't showing much willingness to be aggressive and a rather dour economic outlook with geopolitical tensions still casting a big shadow over the region, it's a tough one to be positive.

EUR/USD is now testing the 1.0800 level once again and if that gives way, we could be on course to test the 2020 low at 1.0635 next.