EUR/USD Turns to the ECB after its First Profitable Month of 2024

  • EURUSD
    (${instrument.percentChange}%)

EUR/USD Analysis

Inflation in Europe has moderated substantially and close to the ECB's 2% target, while the economy has underperformed, under the weight of the tightening cycle that started nearly two years ago. These factors have convinced policymakers they should begin removing monetary restraint and markets expect them to slash rates on Thursday. This would mark a watershed moment, as it comes after ten hikes and would make the ECB the first of the big three central banks to cut, whereas the Fed and the BoE are reluctant.

The path ahead is far from certain though, as various officials have warned against back-to-back cuts and advocated for a data-dependent approach. Furthermore, recent inflation and wage data have showed persistence. This is unlikely to prevent the rate cut this week, but will strengthen the case for a cautious approach ahead.

EUR/USD had its first profitable month of the year and made a strong start to the week, due Eurozone's inflation uptick and bolstered market pricing for two Fed cuts. The pair has 1.0981 in its crosshairs, but we are cautious around sustained strength.

The unfavorable monetary policy has harmed the Euro this year and the ECB's lead can keep it on the ropes. As such we can see renewed pressure and a return below the EMA200 (1.0810), although catalyst would be needed for further losses, as the downside contains multiple buffers.

The pair's trajectory will be determined by the ECB's decision and guidance, which has the potential to spur volatility and two-way action. The cut should weigh on the common currency, but such outcome is largely priced in and officials are more likely to adopt a reserved stance towards future moves.

Why Trade with FXCM

Commission free with fast, efficient execution.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}
Disclosure

Any opinions, news, research, analyses, prices, 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. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.