Euro Surges on Rate Hike Expectations Amid US Inflation Worries
The Euro has seen an upward trend against the US Dollar in early Asian trading hours on Wednesday, reaching around 1.1630. This gain is largely attributed to expectations of a rate hike from the European Central Bank (ECB) at its upcoming policy meeting on Thursday.
As widely expected, the ECB will raise interest rates by 25 basis points to 2.5%, driven by rising energy prices due to the ongoing US-Iran conflict. ING's global head of macro Carsten Brzeski comments, 'We expect the ECB to hike rates by 25 basis points. Another insurance rate hike,' or a 'dovish rate hike' as he puts it.
However, traders will be keeping a close eye on key US inflation data releases later this week, particularly the Producer Price Index (PPI) and Consumer Price Index (CPI). Any signs of hotter inflation in the US could lift the Greenback and hinder the Euro's upward momentum.