Euro softens slightly as markets price 24 bps of ECB tightening in September and 40 bps by year-end amid stalled gains.
The Euro dipped 0.1% against the USD, halting its late-July rally as price movements aligned with shifting yield spreads. The currency remains a mid-performer among G10 peers in mixed trading conditions.
Markets continue to price a hawkish European Central Bank trajectory, with 24 bps of tightening expected at the September meeting and a total of 40 bps by year-end. Recent comments from ECB Executive Board member Schnabel reinforced a hawkish stance, citing inflation risks tied to geopolitics and resilient euro area growth.
Sentiment remains constructive, with risk reversals showing a modest premium for EUR strength. Support is seen in the mid-1.16s, though recent gains have struggled to extend beyond 1.1700, signaling a potential consolidation phase.