Hawkish ECB comments fuel expectations for a June interest rate increase, lifting the euro against a weakening US dollar.
EUR/USD climbed to 1.1640 in Asian trading on Wednesday, reversing minor losses after ECB policymakers signaled a potential June rate hike. The pair gained momentum as hawkish sentiment dominated, with officials emphasizing inflation risks and policy credibility.
ECB Executive Board member Isabel Schnabel argued for a June increase, citing persistent inflationary pressures from Middle East energy shocks and broadening second-round effects. Francois Villeroy de Galhau reinforced the ECB’s commitment to act decisively, while Chief Economist Philip Lane avoided explicit guidance but acknowledged lingering inflation risks.
The US dollar’s decline amid fading safe-haven demand further supported the euro’s advance.