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- EUR/USD to quickly give up gains over the past day if the ECB disappoints – MUFG
EUR/USD to quickly give up gains over the past day if the ECB disappoints – MUFG
Economists at MUFG Bank expect the European Central Bank (ECB) to raise rates by 75 bps today. But in case the ECB hikes only 50 bps, the EUR/USD pair could erase its gains on Wednesday.
ECB set to deliver hawkish policy update
“We expect the ECB to meet market expectations and deliver a 75bps hike today as it moves to play catch up with other major central banks in combating upside inflation risks in the eurozone, although the decision is not as much of a done deal as priced in by the market.”
“If the ECB disappoints and delivers another 50 bps hike today then the euro could quickly give up gains over the past day.”
“Market participants will also be watching closely to see if the ECB expresses more concern over the weakness of the euro, especially against the US dollar in light of upside inflation risks. A stronger indication of concern over the inflationary impact from the weaker euro could at least temporarily provide some more support for the euro at current weaker levels.”
See – ECB Preview: Forecasts from 12 major banks, even 75 bps is too little to lift the euro
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