EURUSD Resumes Decline After ECB Comments

EURUSD has been quite volatile recently, influenced by a combination of factors including economic data releases, political events such as the European Parliament elections, and broader market sentiment. Following Friday’s solid NFP jobs report in the US, the pair initially slid lower but rebounded slightly.

EUR/USD Chart H4 – New Monthly Low

However, the outcome of the right-leaning European Parliament elections led to a significant drop in EUR/USD , with the pair opening with a negative gap on Monday morning. The downward momentum continued into the week, with EUR/USD reaching as low as 1.0733. While there was some recovery yesterday due to weakness in the US dollar, the pair faced renewed selling pressure today, pushing it down to 1.0719.

Comments from ECB Member Makhlouf

• I’m not uncomfortable with little more than market pricing of one rate cut this year and 90 bps by the end of 2025
• Future rate decisions no just all about wages, need to keep close eye on particular risks from global and European conflicts

Remarks by ECB Chief Economist, Philip Lane

• We are not pre-committing to a particular rate path
• Rates are to stay sufficiently restrictive for as long as needed
• There is still high level of uncertainty
• Price pressures are still elevated and is evident in indicators for domestic inflation
• Economic activity is recovering

The European Parliamentary elections are weighing more on the Euro though, however there are various perspectives on the potential benefits and risks associated with initiatives aimed at enhancing energy security and reducing bureaucracy in Europe. On one hand, focusing on energy security can lead to greater stability, economic growth, and reduced dependence on external suppliers. Additionally, streamlining bureaucratic processes can improve efficiency, promote investment, and stimulate economic development.

However, there are concerns about the potential outcomes and implications, particularly regarding the unity of the monetary union. Any significant changes in policy or structural reforms within the European Union (EU) can lead to diverging opinions and possible fractures within the union. These uncertainties may make some traders hesitant or cautious toward the Euro, so EUR/USD is expected to continue lower, toward 1.05.

EUR/USD Live Chart

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Skerdian Meta

Lead Analyst

Skerdian Meta Lead Analyst. Skerdian is a professional Forex trader and a market analyst. He has been actively engaged in market analysis for the past 11 years. Before becoming our head analyst, Skerdian served as a trader and market analyst in Saxo Bank's local branch, Aksioner. Skerdian specialized in experimenting with developing models and hands-on trading. Skerdian has a masters degree in finance and investment.

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