ECB Rate Hike Expected to Have Limited Impact on Euro

The European Central Bank (ECB) is expected to raise interest rates by 25 basis points this week, matching current market pricing and Citi Economics forecasts.

A rate hike of 25.1 basis points is already fully priced into overnight indexed swaps, suggesting the move alone will not trigger a significant foreign exchange market reaction.

Citi noted that even if the ECB delivers a hawkish stance, it may have limited impact on EUR/USD due to expectations already being priced in for future rate hikes.