NEW YORK (Bloomberg) The euro will rally to a 13-month high by June as the European Central bank raises interest rates, then “fade away” as the economy weakens, said John Taylor of FX Concepts LLC, the world’s largest currency hedge fund.The shared currency will reach $1.45 per dollar, the highest level since January 15, 2010, before declining, Taylor said in a Bloomberg Television interview on “In the Loop” with Betty Liu. He spoke after ECB President Jean-Claude Trichet said in Frankfurt the bank may raise interest rates next month for the first time since 2008 to curb accelerating inflation pressures. The ECB kept its key rate at one percent yesterday.“He’s acting on inflationary threats,” said Taylor, 67, founder and chairman of the New York-based firm. “That leads to the euro going up at least momentarily because interest-rate spreads are very, very important in currency valuations, and the dollar interest rates are not going anywhere.”The Federal Reserve has kept the US benchmark at zero to 0.25 percent since December 2008, and Chairman Ben S. Bernanke said on Wednesday in congressional testimony the American economy still needs the support of a low rate. The Fed also began buying $600 billion of Treasuries in November in the second round in a stimulus strategy called quantitative easing.The euro rose 0.5 percent to $1.3940 yesterday in New York, from $1.3866 on Wednesday.The 17-nation currency will weaken against the dollar after June as the economy slumps, Taylor said.“There’s a recession coming,” Taylor said. “We see a slowing in the European economy and the US economy already. The euro will fade away on its own.”FX Concepts reaped gains in the first half of last year betting on a slide in the euro. The company, which kept its long-term view that the common currency would weaken, boosted 2010 returns by wagering on a short-term appreciation of the euro following its fall to a four-year low of $1.1877 in June after Greece became the first European Union nation to seek a rescue during the region’s sovereign-debt crisis.