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Euro holds above 1.1600 as ECB set to raise deposit rate

Dutch front-month gas rose as much as 3.4% to its highest since January 2023, supporting a hawkish ECB backdrop ahead of the Thursday deposit-rate decision.

Reported · Written up by our desk · Major Pairs

EUR/USD held above 1.1600 on Tuesday after a session that ranged about 28 pips, leaving the pair roughly where it opened, as the European Central Bank is expected to raise its deposit rate on Thursday.

Alongside the currency move, European gas prices climbed, with Dutch front-month gas up as much as 3.4% on Tuesday to its highest since January 2023, trading near €75.00 per megawatt-hour and far above a year ago.

Gas-market tightness also featured in the backdrop, with European storage at 67% full versus a seasonal norm of 83% and less than a month before the heating season, while the Strait of Hormuz has been shut since February 28 and Qatar extended force majeure on cargoes through the autumn.

FXStreet said the ECB is expected to lift the deposit rate to 2.5% from 2.25% on Thursday, with the main refinancing rate at 2.65%, a setup that increases the return on euro deposits, even as higher energy prices add pressure via a larger import bill.

Latest closeEUR/USD 1.159 ▼0.1%

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