Lately, I've been wondering if the euro can still rise, and I took a closer look at the European Central Bank's policy trends, discovering many signals worth paying attention to.

The surge in energy prices has indeed changed the ECB's stance. Previously, market expectations for rate hikes were low, but as the Middle East situation pushed oil prices higher, inflationary pressures have grown, directly altering the ECB's policy path. I saw analyses from major banks pointing to a consensus: there will be rate hikes within the year.

The ECB is caught in a classic dilemma. On one side is inflationary pressure from rising energy prices; on the other is a downward revision of economic growth prospects. In this conflicting environment, their communication on policy becomes especially critical. According to forecasts from Nordea Bank, the ECB will hint at a hawkish stance in its policy statements to pave the way for future rate hikes. Goldman Sachs even predicts two rate increases, each by 25 basis points, which would raise deposit rates to 2.50%.

Regarding whether the euro can still rise, the key depends on what signals the ECB sends out. If they clearly hint at a timetable for rate hikes, the euro has room to appreciate. Conversely, if they appear too cautious, the euro may come under pressure. I noticed an interesting comparison: if the ECB hikes rates while the Federal Reserve cuts rates, the EUR/USD could break through the 1.20 level, which would be a positive outlook for euro bulls.

So, can the euro still rise? The answer depends on whether the ECB can confidently signal rate hike expectations. Based on current market pricing, the market is already preparing for this expectation.