Euro Could Rise Above 1.20 Against Dollar if ECB Hikes Rates, Strategists Say

On April 27, strategists from UniCredit Bank's Investment Research Institute suggested that the euro could rise above 1.20 against the dollar if the European Central Bank (ECB) raises interest rates later this year while the U.S. Federal Reserve cuts rates. According to Jin10, the strategists noted in their report that the ECB is likely to keep rates unchanged on Thursday as it awaits further information on the inflation impact of the Iran war. However, they anticipate that the ECB might increase rates in June and September. In contrast, the Federal Reserve is expected to cut rates in December. The narrowing interest rate differential could drive the euro to its year-to-date high of 1.2078 against the dollar, although this would require the risk premium from the current war to fully dissipate first.