Euro Remains Close to Over 1-Year High

The euro was trading at $1.09, remaining close to its 12-month high of $1.1 achieved earlier this month, driven by expectations that the European Central Bank will continue its path of tightening monetary policy in its efforts to combat inflation.

Furthermore, the Eurozone's GDP is projected to expand at a higher rate than previously anticipated.

The European Commission now forecasts growth rates of 1.1% for this year and 1.6% in 2024.

In addition, inflation rates are expected to increase to 5.8% in 2023 and 2.8% in 2024.

On the policy front, market observers anticipate that the ECB will gradually increase the deposit facility rate, potentially reaching a peak of around 3.7% by September.

This would follow a cumulative increase of 375 basis points since the middle of last year.

ECB policymaker Peter Kazimir has suggested the possibility of extending the duration of interest rate hikes beyond previous expectations to effectively manage inflationary pressures.