European Central Bank

The Euro to Dollar rate has remained close to five-year lows even as market expectations have shifted in favour of a sharp uplift in European Central Bank (ECB) interest rates this year and HSBC says this likely reflects worries about the Eurozone economy and risks of financial fragmentation.

The Eurozone's economy is seeing growth slow and inflation rise, but analysts say the European Central Bank might have to prioritise its fight against inflation at the expense of growth by raising rates.

The European Central Bank is on course to raise interest rates as soon as July according to a new report which has attracted analyst attention at the start of a new week, but there is a concerning detail in the report for Euro 'bulls'.

The ECB is trying to "dampen inflation expectations and euro decline," says Nick Kounis, Head of Financial Markets at ABN AMRO.

Euro exchange rates are up in midweek trade, with speculation of an approaching interest rate rise at the European Central Bank possibly driving demand.

The Euro was lower in the wake of the European Central Bank policy update that offered no hint that interest rate rises at are imminent.

The ECB is becoming increasingly restive on its monetary policy stance and looks keen to 'normalise' interest rates in the face of surging Eurozone inflation, which could offer the Euro support over coming weeks.

Switzerland’s Franc has risen against the Euro and many other European counterparts thus far in 2022 but with the tectonic plates of the global interest rate landscape shifting steadily, it may find itself at growing risk of a depreciation against a range of currencies as the year goes on.

EUR/USD underpinned by ECB’s policy stance that sees it take “conditional” step toward normalisation.

The Euro to Pound Sterling exchange rate rose a third of a percent to 0.8423 in the wake of the decision, putting the Pound to Euro rate at 1.1872.

ECB Chief Economist Philip Lane has pushed back against market expectations for a number of interest rate rises in 2022, saying the ECB could accommodate a temporary rise in inflation.

Euro bulls have misread the European Central Bank's intentions on policy normalisation warns a major European bank which sees the Deposit Rate remaining below 0% even once hikes have been delivered.

Nordea sees 25bp hike due in December, Berenberg says March lift-off as more likely.  Timing matters greatly for EUR exchange rates.

The Euro has stabilised after European Central Bank President Christine Lagarde attempted to cool building market expectations for higher Eurozone interest rates in an appearance before EU lawmakers.

EUR/USD eyes 1.14 on ECB inflation warning, drives rally in EUR/GBP & squashes GBP/EUR.

"The main risk to our ongoing EUR bearishness has to be the possibility that the ECB changes tack in a hawkish direction" - Credit Suisse.

"Our strategists would expect EUR/USD to rise materially above 1.20 by next year" - Deutsche Bank.

EUR/USD steadies after retreat back below 1.14, but ECB-Fed divergence set to grow heavier still.

Pound Sterling has already breached Credit Suisse's forecast target against the Euro, leading the Swiss bank to raise a new target and affirm their bullish stance on the UK currency against its continental rival in 2022.

EUR/USD through 1.13 after ECB saysPEPP to end in March.