The ECB is expected to raise rates by the end of Q4 2022, maybe as early as August/September in 2022. This expectation of a 50bps rate hike taking the bank rate to 0% combined with an asset purchase reduction in my opinion would still not be enough to get the euro to meaningfully appreciate against the US dollar. The divergence and magnitude of interest rate differential are wide when comparing the ECB and Fed. We also see uncertainty growing in the economic and sentiment data coming out of Europe as the war in Ukraine escalates.
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