Euro Holds Gains Above 1.1650 on Hawkish ECB Stance

In early Asian trading on Thursday, EUR/USD maintained a modest uptrend, last quoted at 1.16568. The European Central Bank's hawkish policy stance provided major support for the euro, with ECB President Christine Lagarde downplaying dovish interpretations in recent comments and emphasizing that inflation remains elevated, reinforcing market expectations that the central bank will maintain its tightening bias.

**Hawkish Tone Bolsters Euro's Short-Term Resilience**

ECB policymakers have recently continued to release hawkish signals. According to reports, Lagarde last week declined to comment on whether the baseline scenario supports a rate hike, which was initially interpreted by markets as dovish, but her subsequent broader remarks confirmed the central bank's vigilance over inflation risks. Market reports indicate that the eurozone's overall inflation rate is expected to peak at around 3.5% before summer, with core inflation expected to rise moderately to about 2.5%, providing data support for the ECB to maintain its tightening stance. Against this backdrop, the euro has secured steady buying support above the 1.16 level.

**Dollar Awaits Jackson Hole Conference Guidance**

On the dollar side, market trading remains relatively cautious, with traders shifting focus to the Jackson Hole global central bank symposium opening later on Friday. Markets widely anticipate that Federal Reserve officials will offer clearer signals on the policy path at the meeting. With reports of high-level personnel changes in Japan already emerging, investors have become increasingly sensitive to expectations of policy divergence among major central banks, and any statements regarding the pace of future rate hikes or economic outlook assessments could trigger volatility in the foreign exchange market.

**Focus on Policy Divergence Trends Ahead**

Overall, the short-term trajectory of the euro against the dollar remains dominated by policy differences between the European and U.S. central banks. With the ECB continuing to show a hawkish posture and the Fed's subsequent path still pending confirmation, the euro is expected to maintain resilience. However, should Jackson Hole release signals that are more hawkish than expected, especially against the backdrop of rising bets on a Bank of Japan rate hike, the risk of two-way volatility in the exchange rate will intensify. Analysts remind that immediate market reactions following the symposium warrant close monitoring.