Summer lull hits markets. Volumes are low, equity indices and currencies are going nowhere, there is no doubt summer is here. The US dollar extended losses last week after the Fed Chair expressed uncertainty about the effects of tightening on inflation and the release of poor economic data. Across the Atlantic the ECB is expected to move slowly toward tightening and this monetary policy convergence between the two biggest central banks could lead to a sharp appreciation of the single currency and could potentially bring back the currency pair toward levels last seen three years ago. However, the ECB has a lot to lose as it could put the final nail in the coffin of already faltering inflation pressures. Investors will get further clarity at the next ECN meeting on Thursday.