Quick brief – ECB cuts interest rates by 25bps as expected
ECB cuts interest rates by 25bps to 3.5% ahead of next week's FOMC policy meeting
EURUSD takes a slight boost as policymakers maintain a data-dependent approach
The ECB cut its refinancing deposit rate for the second time by 25bps to 3.5% and slashed its marginal lending facility rate by 60bps to 3.90%. The latter was a technical adjustment. Therefore, there was no big surprise in the statement besides a slight upward revision in inflation forecasts and a marginal decline in growth projections.
With no dovish signals yet despite the weakening CPI and muted GDP data, EURUSD traded marginally up at 1.1028 at the time of writing and the focus is now on the press conference as the ECB chief explains the details behind the central bank’s decision.
The policy statement revealed preference for a data-dependent and meeting-to-meeting approach, but journalists might still ask if there is a possibility for a continuous rate cut cycle and whether aggressive rate cuts are necessary.
Technically, EURUSD could still attract fresh buying as long as it holds above 1.0990. The next resistance in this case could develop within the 1.1088-1.1100 region. It seems that the pair is trading within a bullish channel. Hence, only a decisive close below the bullish formation and the 1.0920 level could upset traders.
Latest News
Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.
All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.
Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.
