If the European Bank’s stance turns dovish, be wary of further pressure on the euro

Analysts cited a slowing economy and easing inflation as reasons to believe a rate hike in July would be the last.

According to them, Thursday’s ECB policy meeting could bring more good news for the euro.

The ECB pre-committed to another rate hike in July at its June meeting, meaning the decision to raise rates won‘t have a big impact on markets, but a change in guidance on a September hike could trigger currency volatility.

Valentin Marinov, head of G10 FX strategy at Crédit Agricole, said: “We stick to our view that the euro has priced in too much good news given the increasingly dire domestic situation, and if the ECB ends up lacking a hawkish tone on Thursday, that could force a Some euro longs were liquidated.”