In case you missed the headlines from yesterday and today:

• ECB’s Kazaks: Market bets on rate cuts in early 2024 are wrong
• ECB’s de Cos: We will raise interest rates again in July
• ECB’s Simkus: At least one more rate hike required
• ECB’s Simkus: Should not rule out the option of a September rate hike
• ECB’s Lagarde: Inflation remains too high

Given the circumstances, it is not too surprising to see policymakers brush off the weaker economic performance towards the end of Q2. They have already signaled a rate hike for July, so there is no backing down now.

If you recall, the euro fell on Friday after the poor PMI figures for June here. And as the ECB brushes off those risks, we are seeing the single currency regather some poise this week. EUR/USD is up 0.4% to 1.0945 currently, also helped out by a calmer market mood and a marginally softer dollar.

But if you want a clear signal of policy conviction, you only have to look towards EUR/JPY as the divergence between the ECB and BOJ has sent the pair higher again to fresh highs since 2008:

This also comes as yen bulls have grown increasingly frustrated awaiting a pivot under the Ueda regime, which hasn’t come whatsoever since April.

This article was written by Justin Low at www.forexlive.com.