- EUR/USD attracts some buyers on Thursday amid US Dollar weakness.
- The rise remains limited due to expectations of a new ECB rate cut in 2025.
- Expectations of a less dovish Fed support the USD and help limit the pair.
The EUR/USD pair moves higher during the Asian session on Thursday and, for now, appears to have snapped a four-day losing streak to a more than one-week low hit the previous day. Spot prices are currently trading around the psychological level of 1.0500, up just over 0.10% on the day, as traders eagerly await the long-awaited decision from the European Central Bank (ECB) before opening new directional positions.
The ECB is almost certain to cut interest rates again amid concerns about the weakening Eurozone economy, although investors are divided over the possibility of a larger rate cut. Attention will therefore focus on the monetary policy statement and ECB President Christine Lagarde’s comments at the post-meeting press conference. Investors will be looking for signs of further easing in 2025, which in turn will play a key role in influencing the shared currency and providing a significant boost to the EUR/USD pair.
Looking ahead to the central bank event risk, the decline in the US Dollar (USD) is seen as a key factor offering support to the currency pair. The short-term bias for the USD remains tilted in favor of bullish traders amid growing conviction that US President-elect Donald Trump’s policies will boost inflation and force the Federal Reserve (Fed) to pause its cycle of rate cuts. This continues to push US Treasury yields higher, which is seen as supporting the USD and limiting the rise of the EUR/USD pair.
Furthermore, concerns about the economic impact of Trump’s tariff plans warrant some caution before confirming a near-term bottom for spot prices and positioning for any further bullish moves. Aside from the ECB’s crucial policy decision, traders on Thursday will take cues from US macroeconomic data – the Producer Price Index (PPI) and the usual Weekly Initial Jobless Claims. This, along with US bond yields and broader risk sentiment, will boost the USD and create short-term opportunities around the EUR/USD pair.
economic indicator
Interest rate on the main financing operations of the ECB
The interest rate on main refinancing operations, one of the three key interest rates established by the European Central Bank (ECB), is the interest rate that the ECB charges banks for one-week loans. The European Central Bank announces this at its eight scheduled annual meetings. If the ECB expects inflation to rise, it will raise its interest rates to bring them back down to its 2% target. This is usually positive for the Euro (EUR) as it attracts more foreign capital inflows. Similarly, if the ECB sees inflation falling, it can reduce the interest rate on core refinancing operations to encourage banks to borrow more and lend more, in the hope of boosting economic growth. This tends to weaken the Euro as it reduces its attractiveness as a place for investors to park capital.
Next post:
Thu Dec 12, 2024 1:15 PM
Frequency:
Irregular
Dear:
3.15%
Previous:
3.4%
Fountain:
European Central Bank
Source: Fx Street
I am Joshua Winder, a senior-level journalist and editor at World Stock Market. I specialize in covering news related to the stock market and economic trends. With more than 8 years of experience in this field, I have become an expert in financial reporting.
