ECB Hike and US Bond Buyback Impact Euro Strength

Danske Bank's Research Team is predicting that the European Central Bank (ECB) will raise its deposit rate by 25 basis points to 2.50%, in line with market consensus and pricing.

This move would provide no clear guidance on future rate hikes, which could limit the market reaction to the announcement.

In a separate development, the US Treasury announced that it will conduct a $6 billion long-end bond buyback operation, slightly less than market expectations. This move pushed longer US Treasury yields higher.

The EUR/USD exchange rate edged up in tandem with these yield increases, as investors await the ECB's decision on interest rates today.