ECB rate hikes are already priced in, euro's upside remains limited

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汇通财经2026/06/08 13:56

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The European Central Bank will implement an interest rate hike in its June 11 policy decision, which the market has already fully anticipated. The market focus will shift to forward guidance and the latest economic forecasts. Given that the market has already priced in three rate hikes by the end of the year (with a probability of about 72%), the threshold for a hawkish surprise is relatively high.
It is questionable whether a rate hike at this juncture is positive for the euro. Institutions point out that, against the backdrop of supply shocks driven by energy, tightening policy is unlikely to provide sustained support for the euro—this dynamic was seen before in 2022. With weak growth in the euro area, policy tightening may cause demand adjustments related to terms-of-trade shocks to occur sooner.
Meanwhile, the Federal Reserve's policy narrative has once again turned hawkish, making it difficult in the short term to bet against the recent breakout trend of the US dollar.

Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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ECB rate hikes are already priced in, euro's upside remains limited

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