Why the Dollar's Next Move Starts in Frankfurt, Not Washington
By Marcus Webb
ECB policy divergence is widening the EUR/USD range. The market's obsession with Fed rhetoric is masking the real driver of dollar strength: the pace of ECB rate cuts relative to the Fed hold.
A deeper-than-expected ECB cut cycle would compress the yield differential sharply, pushing EUR/USD toward the 1.05 handle. The key data point to watch is not NFP — it is the EZ flash CPI print on the last Friday of each month.
Outlook: Dollar strength is more likely to originate from Frankfurt dovishness than Washington hawkishness. Position accordingly with a EUR/USD range of 1.0600–1.0950 for Q3.
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