Euro: Schnabel's upbeat tone supports against US Dollar – ING

Market impact: Moderately bullish for EUR/USD, but highly conditional on US data.

Isabel Schnabel’s suggestion that Eurozone growth risks may be shifting to the upside strengthens the case for the ECB to raise rates by 25 basis points at its September meeting, with ING also seeing scope for another move in early 2027. This potentially widens or stabilizes the expected Eurozone–US rate differential in favor of the euro, while improving confidence in the region’s growth outlook.

For EUR/USD, the immediate bias is higher: stronger European growth expectations can attract euro inflows and reduce expectations of rapid ECB easing. ING’s cited framework identifies the 1.1650–1.1660 area as important support and the 1.1700–1.1710 region as the next upside objective; these are source-referenced market levels, not independent technical signals.

The bullish interpretation is strongest if incoming Eurozone activity and inflation data continue to validate Schnabel’s tone. It could also support EUR crosses more broadly, particularly against currencies whose central banks are perceived as less hawkish.

However, the signal is not decisive. The article specifically flags US core PCE inflation as the main near-term offset: a stronger-than-expected reading could lift Treasury yields, reinforce Federal Reserve tightening expectations, and support the dollar despite the ECB repricing. A weak Eurozone data release, renewed energy-price pressure, or signs that Schnabel’s comments do not represent an emerging ECB consensus would also undermine the euro response.

Trading focus:

monitor the September ECB communication, subsequent Eurozone growth and inflation releases, the US core PCE outcome, relative German–US yields, and whether EUR/USD can sustain trade above the 1.1650–1.1660 support zone. The likely effect is short-term euro-positive, with medium-term upside dependent on confirmation through data and ECB guidance.