CEE: Dovish repricing pressures regional currencies – ING

💡 DMK Insight

Central and Eastern European markets are pivoting towards dovish rate expectations, and here’s why that matters: With key inflation and GDP data on the horizon, traders need to pay close attention to how these shifts could impact currency pairs like EUR/USD and regional equities. A dovish stance typically signals lower interest rates, which can weaken a currency and boost asset prices. If inflation data comes in lower than expected, we could see a significant reaction in the forex markets, especially if the European Central Bank hints at maintaining or reducing rates. This could create opportunities for short-term trades, particularly for those looking at long positions in equities or commodities that benefit from lower borrowing costs. But don’t overlook the flip side—if inflation surprises to the upside, we might see a quick reversal in sentiment, leading to volatility. Keep an eye on key levels for EUR/USD; a break below 1.05 could trigger further selling pressure. Watch for the inflation report due next week, as it could set the tone for the rest of the month and beyond.