EUR: Lots of euro strength talking in Sintra - ING

ECB officials have offered little in the way of monetary policy signals in Sintra thus far, which is hardly a surprise, ING's FX analyst Francesco Pesole notes.

EUR/USD remains largely driven by the USD

"The ECB delivered its hawkish pivot at the June meeting and is now content to await incoming data before making further moves. Flash CPI estimates for June showed an unexpected slowdown in German inflation to 2.0%, while the eurozone reading re-accelerated from 1.9% to 2.0%, as expected. Core inflation was steady at 2.3%. Neither the flash CPI figures nor the surprisingly subdued inflation expectations for May have shifted market expectations, with the first ECB cut still priced for December."

"The strength of the euro has featured prominently in discussions at Sintra. Vice President Guindos remarked that EUR/USD at 1.20 is 'acceptable', but suggested a move above that level would be 'more complicated', particularly in terms of the speed of any appreciation - a sentiment echoed by Kazaks and Simkus. It will be worth watching whether a move to 1.20 elicits stronger pushback from policymakers. President Lagarde, meanwhile, continues to champion the 'global euro' but remains silent on the exchange rate itself."

"There are more ECB speakers due in Sintra today, but we do not anticipate much impact on the euro. EUR/USD remains largely driven by the dollar, and the market's inclination to buy dips was clear in yesterday's brief correction following stronger US data. A jump to 1.20 on a big US payrolls miss remains possible."