(Bloomberg) -- The euro will likely advance to its highest level since 2021, as the dollar is set to weaken with the Federal Reserve signaling a pause in rate hikes and the European Central Bank continuing to tighten policy, according to Deutsche Bank AG.
“We see EUR/USD continuing its drift higher toward 1.15 by mid-year,” says Tim Baker, head of macro research in Sydney, Australia. “While the Fed now seems open to a pause, the ECB may still have work do to and we expect it to accelerate its QT program,” he added.
Investors will be monitoring how the currency reacts to ECB's policy decision due later Thursday where it is expected to raise its deposit rate 25 basis points to 3.25%.
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