The strengthening of the euro, combined with the tightening of monetary policy by the leadership of the European Central Bank (ECB), may lead to a weakening of the US dollar’s position in the world foreign exchange market. After the meeting, the regulatory board is expected to raise the key rate by 25 basis points to 3.25%. informs The Bloomberg agency cites the forecasts of Deutsche Bank AG analysts.
“The euro is likely to hit its highest level since 2021 as the dollar weakens as the Fed signals to pause on rate hikes and the European Central Bank continues to tighten monetary policy. <….> EUR/USD will continue to rise towards 1.15 mid-year.
The ECB leadership has been tightening monetary policy for a long time. The European regulator has raised the key rate several times in a row to combat rising inflation in the region. Currently, the bar is held at about 3% per year.
May 3, administration of the United States Federal Reserve System (FRS) augmented base interest rate 25 percentage points, up to 5–5.25% per annum. At the same time, the rate is the highest since 2006, where it is now at 5.25% per year.