EUR/USD Reverses Course As ECB Confirms June Rate Cut
EUR/USD has been showing resilience for a month, but it failed to push above 1.10 and now the trend is changing as the ECB interest cuts see
EUR/USD has been showing resilience for a month, but it failed to push above 1.10 and now the trend is changing as the ECB interest cuts seem to be on the way, with the first starting in June. This week we have had numerous European Central Bank officials who have pointed to a June cut, which has turned the Euro soft.
EUR/USD H4 Chart – Bearish Trend Reversal If MAs Get Broken
The Euro was making some decent gains against the USD, climbing around 3 cents from the bottom to the top. But, buyers failed to reach 1.10 last week, with the price coming short at 1.0980s, while this week the high was 1.0965, so the highs getting lower is a sign of a trend reversal. Now this forex pair has lost around 100 pips from the highs and is facing moving averages. if they are broken, then the door will be open for 1.08 first where the 200 SMA (purple) stands and then 1.07 for EUR/USD .
ECB Members Presing on June Interest Rate Cut
De Guindos provided several noteworthy comments:
- He anticipates Europe’s economy to pick up in the second half of 2024.
- Decision-making on monetary policy will be based on a sufficient level of information available in June.
- He expressed concern about the high valuations of financial assets.
Regarding market expectations for interest rate cuts, he mentioned that the market is pricing in about a 15% chance of a rate cut in April, with the probability increasing to 85% for a rate cut in June.
Knot’s comments provide clarity on the ECB’s potential monetary policy actions:
- He anticipates the first rate cut to occur in June.
- Further rate cuts are most likely to follow in September and December.
- Interim meetings could also be utilized for rate cuts if incoming data suggests additional monetary stimulus is necessary.
Knot’s statements offer a straightforward outlook on the ECB’s potential rate cuts, leaving little room for ambiguity or speculation. Yannis Stournaras, an ECB policymaker from the central bank of Greece, also made several notable remarks regarding monetary policy. His comments underscore the urgency felt by some ECB policymakers to implement rate cuts in response to economic challenges. He emphasizes the need to act swiftly, suggesting that waiting until after the Fed’s potential rate cuts is not necessary.
His remarks support the notion of implementing four rate cuts throughout 2024, with a focus on making two cuts before the summer break to address economic concerns promptly. This reinforces the expectation that the ECB may indeed move to cut rates, with the first rate reduction potentially occurring in June, followed by another in July.
All of the evidence suggests that the ECB has decided to start cutting rates in June, and the above remarks confirm this. They confirm two rate cuts until July. After that, there will likely be two more until the end of 2024.
EUR/USD Live Chart
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