MUFG Research discusses its expectations for this week's ECB policy meeting on Thursday.
"While we still believe it is premature to expect the ECB to more seriously consider rate hikes at the current juncture, market participants will be watching closely to see if President Lagarde pushes back as strongly on Thursday against rate hike expectations for this year. It poses the main upside risk to our view that the euro will remain weak in the near-term," MUFG notes.
"We are though expecting the ECB to turn more hawkish later this year providing more support for the euro as emergency policy settings are tightened in the euro-zone and the ECB moves closer to raising rates next year," MUFG adds.
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