According to Jin10 Data, ING said that the euro looks less stable than the US dollar because the expectations of interest rate cuts by the European Central Bank have more room to rise than those of the Federal Reserve.

ING analyst Francesco Pesole noted in a report that the market expects the Federal Reserve to cut interest rates by 50 basis points by the end of the year, but expects the European Central Bank to only cut interest rates by 64 basis points in its last three meetings in 2024.

He believes that even without data as a catalyst, the market may price in more ECB rate cuts to align expectations with the Fed. The prospect of a recession in Germany could help this alignment, while European inflation data due later this week is a key test of interest rate expectations.