UOB strategists forecast a final 25 bps ECB hike in September, supporting EUR/USD despite a slight pullback.
EUR/USD dipped 0.1% to 1.1369 after ECB Governing Council member Gediminas Simkus signaled a rate hike is more likely than a hold. The pair found support as UOB strategists now expect a 25 bps increase in September, raising the deposit rate to 2.50%.
The ECB held rates steady at its July 23 meeting, keeping the deposit rate at 2.25%. Markets had priced in a pause, but elevated energy prices and potential second-round inflation effects could prompt further tightening.
UOB’s outlook suggests an extended pause after September, though risks remain skewed toward additional hikes if inflation pressures persist.