ING Netherlands: Changes in ECB rate hike expectations may not necessarily weaken the euro, oil prices remain the main driving factor

Golden Ten Data reported on March 11 that Francesco Pesole from ING Bank stated in a report that the market may rule out the possibility of an ECB rate hike, but this may not necessarily weaken the euro. According to LSEG data, due to the Iran war pushing up energy prices, the market has now priced in a 25 basis point rate hike by the end of the year, whereas previously the expectation was for rates to remain unchanged. Pesole noted that although the likelihood of a rate hike appears low, ECB policy expectations have very limited impact on the euro, and oil prices remain the "absolute main driving factor." He mentioned that The Wall Street Journal reported the International Energy Agency is planning the largest oil reserve release in history, which could keep EUR/USD above 1.60 in the short term.