EUR pulls back in spite of hawkish ECB members

EURUSD drops below 1.1000 as markets are positioning for tomorrow's US CPI print. From a short-term perspective, divergence between EURUSD and TNOTE is being closed. On the other hand, traders were offered some hawkish comments from ECB members Kazaks and Nagel.

Kazaks

• Rate hikes may not end in July (ECB announced that it will make at least one more hike but market prices in at least 2 hikes)

• Market is premature to price in first rate cuts as soon as early-2024

Nagel

• Inflation remains too high

• Interest rates should rise further

• Market is not always right when it comes to terminal rate pricing

EURUSD is pulling back with the move being primarily driven by USD strengthening. Source: xStation5