ECB Hawkishness Weighs on EUR/USD Despite Limited Dovish Pushback

European Central Bank (ECB) commentary remains hawkish, despite limited pushback from dovish voices, according to ING's Francesco Pesole. Recent public appearances by ECB members have reinforced this tone.

Three policymakers delivered policy-related remarks yesterday, with Neutral-to-hawkish Gabriel Makhlouf leaving the door open to an October hike and Ante Zigman stressing the resilience of growth and the need to bring inflation lower.

Olli Rehn, one of the Governing Council's most dovish voices, was more neutral but did not challenge market expectations. Pesole notes that all three policymakers agreed there is no evidence of second-round effects, which remains inconsistent with prevailing hawkish guidance.

Given this, ING advises against aggressively selling EUR/USD at current levels. However, the bank still sees downside risks for the Euro due to potential further increases in front-end US rates and a broader commodity and risk backdrop weighing on the currency.