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- According to ANZ, the ECB is expected to raise rates by 25 basis points in both June and July, reaching a terminal deposit rate of 3.75%. This aligns with market expectations and signifies that the ECB's easing cycle will commence later and be shorter than the Federal Reserve's. ANZ suggests that this scenario will provide support to the Euro.
- The bank also points out that the Euro has largely priced in the economic slowdown in Europe. It believes that any additional decline in the Euro would more likely be due to movements in the US dollar. ANZ states that there needs to be more evidence of a sustained slowdown in the Euro Area before considering any adjustments to its forecasts for EUR/USD.
- As it stands, ANZ is maintaining its year-end target for EUR/USD at 1.14, indicating a belief in the Euro's resilience in the face of economic headwinds. This reflects the bank's assessment of the ECB's policy path and how it contrasts with the Federal Reserve's approach.
- Investors will be keenly observing developments in both Europe and the US to see how they shape currency movements in the months ahead
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Earlier previews:
- The ECB meeting is on Thursday, 15 June, announcement due at 1215 GMT (815 US Eastern time)
- European Central Bank President Lagarde press conference follows at 1245 GMT (845 US Eastern time)
