|

Euro faces headwinds as ECB cuts rates, Lagarde hits slightly dovish tone

The euro is facing some headwinds this afternoon, after the ECB cut interest rates again, while hinting at more easing ahead in its accompanying communications. There was no explicit forward guidance provided by president Lagarde, nor were we expecting any.

She did, however, strike a relatively dovish note during her press conference, saying that the Euro Area economy had been weaker-than-expected and that there were more downside risks to inflation than there were upside ones.

The ECB is not currently in the business of pre-committing to a rate path, with Lagarde again emphasising a meeting-by-meeting approach. That said, her comments on inflation, which appear to portray greater confidence on achieving the 2% target, and the bank’s apparent concerns over the growth outlook, which has clearly deteriorated since the summer, point to further rate cuts by year-end. Indeed, markets are now almost fully pricing in an additional four cuts in each of the next four ECB meetings through to April.

Author

Matthew Ryan, CFA

Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.

More from Matthew Ryan, CFA
Share:

Editor's Picks

AUD/USD recovers toward 0.7000 amid improving mood

AUD/USD is firming up toward 0.7000 in Asia on Tuesday, helped by improving market mood. A pause in the US Dollar rebound also aids the pair's upside. However, geopolitical risks and caution ahead of AI tech earnings report could limit the pair.

USD/JPY flatlines near 158.50 as markets seek direction

USD/JPY steadies around 158.50 in the Asian trading hours on Tuesday. Traders prefer to wait on the sidelines ahead of Japan’s National Consumer Price Index inflation data later on Friday. Meanwhile, elevated US bond yields provide some support to the US Dollar against the Japanese Yen.

Gold sellers remain in control while below 21-day SMA

Gold is falling for the third straight day on Tuesday, having run into sellers on several occasions at the $4,200 level. The bullion awaits a clear trading impetus amid uncertainty about the US Federal Reserve’s interest rate outlook and looming geopolitical risks.



Ripple and Cardano face downside risk as Solana consolidates
Top altcoins, including Ripple (XRP), Cardano (ADA), and Solana (SOL), stall on Tuesday after a bearish week, suggesting a brief pause in selling pressure. The technical outlook for XRP and ADA indicates a downside bias, while SOL shows mixed signals, with the price holding above $100 as momentum eases. Ripple trades at $1.2974 at press time on Tuesday, keeping a bearish near-term tone.
Markets now see no hike in October, but inflation is still a major concern

US inflation has returned to the spotlight after the latest Consumer Price Index (CPI) and Producer Price Index (PPI) reports showed a significant acceleration in price pressures. The data raised concerns that the Federal Reserve may need to maintain restrictive monetary policy for longer, pushing interest-rate expectations higher and putting pressure on stocks and gold.

The US Dollar fell. Gold didn't rally. That tells you everything
Gold (XAU/USD) is struggling to capitalize on a weaker US Dollar (USD), after repeatedly failing to establish itself above the $4,200 level. The precious metal remains confined to a relatively narrow trading range despite a combination of developments that would normally support higher prices.