EUR/USD is back below 1.0700 after a very short-lived rebound. Economists at ING believe that the pair could challenge the 1.06 level.

Hard to push ECB rate expectations much higher

“One issue that the euro is facing at the moment is that markets are fully pricing in two more ECB rate hikes by September, and it would probably take a rather substantial upward surprise in inflation figures to push hawkish expectations beyond that point.”

“If anything, risks appear skewed towards some dovish repricing – and a negative Euro impact – today should France and Germany follow Spain in showing a faster-than-expected slowdown in inflation.”

“At this stage, and given ongoing USD strength, EUR/USD may soon test 1.0600.”