Why are markets scaling back ECB rate-cut bets now?

ECB hawks are emphasising patience while services inflation remains sticky and wage growth needs more proof of cooling. That tone reduces near term easing odds and keeps EUR moves tied to U.S. data. Without softer core inflation and weaker growth, investors expect a later start to cuts rather than a rapid pivot.

How does this view affect the EUR/USD outlook?

With fewer cuts priced, EUR rallies can stall on strong U.S. data and higher yields. We see choppy ranges with a mild bias to USD strength into key releases. Clear downside surprises in U.S. prints or softer Eurozone inflation would be needed to shift momentum back toward the euro.

What can Australian investors do with EUR exposure?

Match hedges to spending and liabilities, not guesses. Consider partial hedges for EUR assets and ladder conversions for invoices or travel. Size EUR shorts modestly with defined risk. Use options around data weeks. Keep diversification across AUD cash and quality intermediate bonds while waiting for clearer policy signals.

Which Eurozone inflation indicators matter most?

Services inflation, negotiated wages, underlying core trends, and base effects from energy. A steady decline across these would support earlier easing and help duration. If these stay firm, cuts may be delayed. Watch monthly prints and revisions, as they shape the ECB’s confidence in disinflation.

Global Market Insights

ING Flags Fading ECB Cut Odds: EUR Sentiment Softens — January 08

ByHuzaifa Zahoor January 8, 2026

ING Bank ECB rate cuts view is shifting markets on 8 January, with ECB hawks pushing back on early easing bets. For Australian investors, this cools euro optimism and keeps EUR moves tied to the U.S. dollar. We see a near term bias to USD strength, while Eurozone inflation and data risk events guide rate expectations. This matters for AUD portfolios that hold European assets, hedged ETFs, and travel budgets linked to EUR costs. ING’s stance also nudges euro area bond duration trades, as investors reassess carry and curve exposure into the next ECB meeting.