• EUR/USD rises to near 1.1470 as the Euro gains in the countdown to the ECB’s policy meeting.
• The ECB is expected to leave interest rates steady with a hawkish guidance on the monetary policy outlook.
• The Fed signaled that interest rate cuts are inappropriate as progress in inflation has stalled.

The EUR/USD pair trades 0.15% higher to near 1.1470 in the early European session on Thursday. The major currency pair gains as the Euro (EUR) rises against its major currency peers, except antipodeans, ahead of the European Central Bank’s monetary policy announcement at 13:15 GMT.

The ECB is anticipated to leave interest rates unchanged, with the Rate on Deposit Facility and Main Refinancing Operations Rate staying at 2% and 2.15%, respectively, for the sixth meeting in a row.

Speculation that the ECB will maintain the status quo is built on recent comments from various officials, in which they discourage the need of any monetary policy adjustment as inflationary pressures in the Eurozone have remained close to the central bank’s 2% target for a medium period.

Meanwhile, analysts at Commerzbank expect ECB President Christine Lagarde to deliver a hawkish tone on the monetary policy outlook as rising oil prices due to Middle East conflicts have de-anchored inflation expectations globally.

The report from Commerzbank stated that traders have now fully priced in the first interest rate hike by September and a 50% chance of another move by year-end.

As of writing, the US Dollar (USD) holds onto Wednesday’s gains, with the US Dollar Index (DXY) hovering around 100.20. The US Dollar gained sharply on Wednesday after the Federal Reserve’s (Fed) monetary policy outcome, in which it left interest rates unchanged in the range of 3.50%-3.75%.

The Fed signaled that interest rate cuts are not appropriate as progress in inflation towards the 2% target has paused. “If inflation progress stalls, rate cuts will not follow,” Fed Chair Jerome Powell said in the press conference.