Hawkish ECB to support EUR as long as there are no contagion effects in European banking sector – Commerzbank

EUR/USD climbed to its highest level in a month at 1.0750 on Monday. Economists at Commerzbank expect the shared currency to remain supported by a suddenly hawkish European Central Bank (ECB).

Euro supported by hawkish ECB outlook?

“From the market’s point of view, the ECB has suddenly become one of the most hawkish central banks, which might support the Euro as long as there are no contagion effects in the European banking sector.”

“At present rates are expected to peak at 3.25% as opposed to at 4% previously. The ECB is likely to keep its options for the future rate path even more open now and will hope that its next decision in May will be held in a less tense market environment.”