Bullish Day for EUR/USD Despite ECB Minutes Solidifying A June Rate Cut

The rate of EUR to USD has been increasing this week, sending EUR/USD 1.50 cents higher from the lows despite the ECB meeting minutes showing that they have made their mind up about a June rate cut. Yesterday the CPI report from the Eurozone showed that inflation slowed more than expected in the Eurozone during March, but the Euro kept the bullish momentum nonetheless.

EUR/USD Chart Daily – The Climb Stopped at the 100 SMA

EUR/USD turned bearish in March, falling more than 2 cents until Monday, but on Tuesday we saw a reversal after the soft US ISM services which sparked the decline  in the USD. The soft inflation figures form the Eurozone and the minutes from the European Central Bank today which indicated that the ECB is preparing to cut rates in June didn’t do much harm to the Euro. However, this pair might have reached a top since it is pulling back slightly from the 100 daily SMA (green).

The ECB Minutes from the March 7th Policy Meeting

• Progress on Inflation: The minutes indicated that there had been further progress on all three elements (presumably referring to economic growth, employment, and inflation), leading to increased confidence that inflation was moving towards the ECB’s target.
• Need for More Data: Despite the progress, the Governing Council emphasized the need for more data and evidence to be sufficiently confident in the inflation outlook.
• Predictions for Inflation: The minutes suggested that inflation was expected to maintain its downward trend in the following months, with a lumpy profile and a trough forecasted after the summer.
• Deceleration in Wage Growth: There were hints that wage growth was starting to decelerate, which could have implications for inflation dynamics.
• Confidence in Inflation Outlook: Members expressed greater confidence that inflation was on track to gradually decrease to the ECB’s 2% inflation objective in a timely manner.
• Fragile Disinflationary Process: Despite the positive developments, it was noted that the disinflationary process remained fragile, highlighting the need for caution.
• Strengthening Case for Rate Reductions: The minutes indicated that the case for exploring rate reductions was strengthening, suggesting that the Governing Council was considering additional monetary policy measures to support the economy and inflation.

EUR/USD Live Chart