The euro rose ahead of the European Central Bank's interest rate decision on Thursday, with markets believing that the European Central Bank may confirm its interest rate hike in July. The rise of the euro shows that investors are actively preparing for a more "hawkish" outcome, that is, policymakers may recognize the need to raise interest rates many times to bring inflation expectations in the eurozone back under control.

However, the foreign exchange strategist of dominion Securities said that this enthusiasm of the market may be wrong, because dominion believes that there is limited room for the euro to rise sharply, because the European Central Bank may perform poorly on the increasingly hyped expectations.

James Rossiter, head of global macro strategy at dominion securities, said: "unless Lagarde promises to raise interest rates by 50 basis points in a row, there is limited room for the euro to rise against the US dollar."

Dominion securities predicts that the European Central Bank will announce the termination of the remaining quantitative easing program within a few weeks. They expect that Lagarde may admit to raising interest rates by 25 basis points at the meetings in July and September. Importantly, they expect Lagarde to reiterate the need for a "gradual" interest rate rise, thereby curbing expectations of a 50 basis point rise. This may disappoint Euro bulls.

In fact, under this basic situation, Dow Jones Securities believes that the euro will fall back to 1.06 against the US dollar.

However, Dow Jones securities predicts that if there are more hawkish results, such as the European Central Bank raising interest rates by 50 basis points, the euro may rise to a high of 1.0820, and the pound will fall below 1.16 against the euro.