EUR/USD: Medium-term strength as ECB will deliver, again – Wells Fargo

EUR/USD preserves its recovery momentum. Economists at Wells Fargo expect the shared currency to gain ground against the US Dollar amid further European Central Bank tightening.

ECB's Deposit Rate to peak at 3.50% by June this year

“We expect a further 25 basis points rate hike in May followed by a final 25 bps rate hike in June, which would see the ECB's Deposit Rate for the current cycle peak at 3.50%. In that context, market pricing, which currently implies a peak policy rate of around 3.09%, appears light to us.”

“Our more forceful outlook for ECB policy is an important factor supporting our outlook for medium term strength in the Euro versus the US Dollar.”