Euro rose in European trade against dollar after a two-day hiatus from gains, on track to retest nine-month highs on prospects of ECB's policy tightening.
The European Central Bank is expected to increase interest rates by 50 basis points at the first meeting of 2023 next Thursday, with another 0.5% rate hike in March.
EUR/USD rose 0.2% to 1.0884, with a session-low at 1.0853, after closing down 0.25% on Friday, the second loss in a row on profit-taking off nine-month highs at 1.0929.
Euro rose 0.1% against dollar last week, the third weekly profit in a row as concerns about a policy gap between Europe and the US cease.
The ECB
ECB President Christine Lagarde said recently that inflation remains too high and the bank is committed to continuously increase interest rates until inflation is brought back to 2%.
Lagarde once again repeated the use of the phrase "staying the course" when talking about interest rate decisions at upcoming meetings, meaning the current pace will be maintained at least until the second quarter of the year.
Other ECB members strongly hinted at multiple 0.5% rate hikes in both February and March.
Estimates
Despite current losses, analysts still expect the euro to pierce $1.1 in the short term as the ECB prepares a rate hike that's double the hike of the Fed.
Broadly, the euro is expected to advance against most major rivals to year-highs.