EUR/USD: ECB to reinforce euro weakness if delivers another 50 bps hike – MUFG

The next key event for the euro in the week ahead will be the European Central Bank’s (ECB) upcoming policy meeting on Thursday. Economists at MUFG Bank note that the balance of risks for the euro appear more tilted to the downside.

ECB set to deliver a 75 bps hike

“We are still sticking to our view that the ECB will deliver a 75 bps hike. If the ECB disappoints market expectations and delivers another 50 bps hike it could reinforce euro weakness in the near-term.” 

“The balance of risks for the euro appear more tilted to the downside from the policy update given the eurozone rate market is already repricing in a more aggressive rate hike profile and it has failed to provide much support for the euro.”