Bank of America Global Research discusses the EUR outlook and maintains a bearish bias through the Summer.
"Sintra reinforced the message of a paradigm shift in inflation which will require further policy adjustments. But whilst 50bps has become the norm for many central banks, the ECB remains cautious as the Fed remains on the offensive. ECB President Lagarde's once again reiterated the ECB's preference for a 25bps rate hike on 21st July and since hitting the highs through mid-June, German 10yr yields are now 40bps lower. Of more relevance to EUR is the fact that European front-end yields are sharply lower versus G10 counterparts (weighted terms)," BofA notes.
"As the market continues to pair back its expectations for the scale of ECB rate hikes this year, we think EUR is increasingly being left behind in the global rate hiking cycle. Much will obviously depend on the forthcoming Eurozone inflation print but we think that the path of least resistance remains for a weaker EUR through the summer," BofA adds.