Rising trade tensions are increasing the likelihood of a rate cut by the Fed, causing the recent weakness in the US dollar. We recently saw the RBA cutting interest rates as well, from 1.50% to 1.25%.
The attention now turns to ECB, which is due to meet on Thursday. Economists are speculating that the European Central Bank will sound dovish and reflect the Fed’s recent outlook.
Given the recent weakness in inflation across Eurozone, there could be some interesting updates to watch out for from the ECB meeting. The central bank is expected to offer new loans to banks in a bid to maintain flow of credit in the economy.
For now, EUR/USD has improved slightly and is trading above 1.11 buoyed by the weakness in the USD. At the time of writing, this forex pair is trading at 1.1279.