Lagarde's Dovish Tilt Slams Euro Below Support
ECB President Christine Lagarde's dovish comments have exposed the euro to its June low, causing it to slip below 1.1360 support against the US dollar.
The euro-to-dollar exchange rate is currently at 1.1346, down 0.2% from earlier in the day, after Lagarde told the European Parliament's economic committee that the energy shock has yet to reach wages and a 'measured response' remains appropriate.
According to ING's FX Strategist Francesco Pesole, Lagarde's comments confirm their suspicion that if one central bank hikes interest rates in October, it will be the Federal Reserve, not the ECB.
The spread between US and Eurozone rate expectations has widened beyond 155 basis points, close to the 163bp maximum reached in early July, when the euro-to-dollar rate was at its summer lows.