Italy’s 10-year BTP yield slipped toward 3.45%, tracking European peers lower after ECB policymaker Martin Kocher warned that further euro strength could prompt the central bank to resume interest rate cuts.
Kocher described the euro’s recent rise against the dollar as “modest” but said the ECB may need to act if further gains significantly weigh on inflation projections, emphasizing the need to keep “full optionality” on policy.
Markets slightly raised expectations for a summer easing, with the implied probability of a July 25-basis-point cut rising to around 25% from roughly 15% earlier.
The euro recently surpassed $1.20 for the first time since June 2021, boosted by broad dollar weakness after US President Donald Trump called the greenback “great,” even as it hit a near four-year low.