The ECB has increased rate cut remarks, with markets implying the first to come in June, but after the sudden SNB rate cut this week, we might even get an April ECB interest rate cut. This has turned the Euro quite bearish, with EUR/USD reversing on Thursday morning and falling around 150 pips in the last two days of the week.

EUR/USD Chart H4 – Lower Highs Indicated the 150 Pip Crash

The 200 SMA has been broken now

ECB President Lagarde Confident Inflation Will Continue to Fall

ECB President Lagarde’s remarks at the Euro Summit in Brussels underscored the continued projection of decreasing inflation, alongside expectations for accelerated economic growth this year, driven largely by increasing purchasing power. Lagarde emphasized the importance of enhancing economic resilience through heightened productivity and capital investment, highlighting the pivotal role of the Capital Markets Union (CMU) in achieving these objectives.

While Lagarde did not delve extensively into monetary policy specifics, her comments, when considered alongside statements from other ECB members, provide additional insight. Collectively, these remarks suggest a growing consensus within the ECB for implementing rate cuts sooner rather than later. As such, market participants may interpret these signals as indicative of potential near-term rate cuts by the ECB, which will keep the Euro bearish.

Imminent ECB Rate Cut by ECB’s Robert Holzmann

• A rate cut is in preparation
• But the timing of the rate cut is unclear
• We are data-dependent
• There are many who believe that developments in June will be such that we can cut at the time
• My view is that inflation is stickier than those people believe, which is why I am waiting for June data

ECB Edward Scicluna Pressing on Policy Easing

Malta’s Finance Minister, Edward Scicluna, has emphasized the need to avoid overburdening economic activity amid the current scenario of weakened demand. Despite widespread discussion centered around a potential rate cut in June, Scicluna suggests that April could also be considered as an option. While the majority of ECB policymakers have signaled towards a rate cut in June, they have not ruled out the possibility of a decrease in April. The recent decision by the Swiss National Bank (SNB) to lower interest rates further has added new dimensions to the market’s considerations. As a result, traders are likely to reassess their expectations regarding the ECB monetary policy decision.

The EUR/USD currency pair closed at the day’s lows, experiencing a decline of 55 pips to 1.0805, marking the lowest level in March. This movement suggests heightened concerns and potential shifts in sentiment toward the Euro against the US dollar amidst evolving expectations surrounding central bank policies.

EUR/USD Live Chart