ECB to raise interest rates by 25 basis points

In the Asian session on Thursday (May 4), the EUR/USD rose to 1.1078, an increase of 0.18%. According to institutional analysis, the market underestimated the risk of the ECB raising interest rates by 50 basis points, but it believes that due to the pressure on the banking industry, the ECB will raise interest rates by 25 basis points.

Forward guidance on a June rate hike may return, and there is a risk of fine-tuning asset purchase programs and targeted long-term refinancing operations. In terms of foreign exchange, we tend to be bullish on EUR/USD. Given the current long position in the euro, the market reaction may be more moderate, but we will buy EURUSD on dips.