EUR/USD: ECB policy meeting in focus – MUFG

FXStreet Insights Team FXStreet

MUFG Senior Currency Analyst Lee Hardman discusses the upcoming ECB policy meeting and its implications for the Euro. The EUR/USD has dipped below the 1.1800-level after reaching a high of 1.2081 last week. Hardman expects the ECB to maintain its current policy stance, with a higher risk of further easing rather than a rate hike. The Euro's strength has raised concerns among ECB policymakers, but significant pushback is not anticipated at the meeting.

Market expectations for ECB meeting

"We are not expecting today’s ECB policy meeting to provide a fresh catalyst for euro performance in the near-term. The ECB are likely to reiterate that they are comfortable with their current policy stance but are unlikely to completely rule out the prospect of further easing."

"We expect the ECB to leave their policy rate on hold through 2026, but judge that there is a higher risk of another cut than a hike given inflation is likely to undershoot their target."

"A couple of ECB policymakers expressed some concern over euro strength last week when EUR/USD rose briefly above 1.2000, but we doubt that they will push back strongly at today’s policy meeting."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor.)

Author

FXStreet Insights Team

FXStreet

The FXStreet Insights Team is a group of journalists that handpicks selected market observations published by renowned experts. The content includes notes by commercial as well as additional insights by internal and external analysts.

AUD/USD gains traction near 0.7100 as the post-Fed USD rally pauses

AUD/USD finds fresh buyers and retakes 0.7100 in the Asian session on Thursday as the US Dollar pauses its hawkish Fed-inspired rally to its highest level since late July. However, RBA rate-hike bets and hopes for US-Iran diplomatic efforts lift risk sentiment and support the risk-sensitive Australian Dollar and the major.

USD/JPY reverses a dip below 156.00 as focus shifts to BoJ

USD/JPY is reversing a brief dip below 156.00 in the Asian session on Thursday, looking to snap a three-day winning streak to a nearly two-week top set the previous day. The US Dollar pauses following the post-Fed rally to seven-week highs, while a more hawkish repricing of the BoJ's policy normalization path supports the Japanese Yen. This keeps the pair's upside limited, with the focus now shifting to the BoJ policy decision due on Friday.

Gold extends fragile recovery from multi-week low as softer bond yields weigh on USD

Gold builds on its intraday ascent through the first half of the European session, and recovers further from a near six-week low, touched the previous day. A modest pullback in US Treasury bond yields prompts some US Dollar profit-taking, which is seen offering support to the commodity. However, the Federal Reserve's hawkish outlook, along with escalating Middle East tensions, should limit deeper losses for the safe-haven Greenback and cap the non-yielding bullion.

Ripple, Cardano, Dogecoin: Downside risk looms amid market uncertainties

Top altcoins, including Ripple (XRP), Cardano (ADA), and Dogecoin (DOGE), face imminent downside risk as prevailing upside momentum recedes toward neutral.

The Fed hawkishly hiked rates

The Fed proceeded with its first rate hike since 2023, as was widely expected. It should be noted that the bank hiked rates against US President Trump’s wishes. It’s characteristic that Fed Chair Warsh stated that 'Inflation is too high and has been for too long’, signalling his hawkish intentions.

How Japan became the World's Banker and why that era may be ending

Japan's ultra-low interest rates helped finance trillions of dollars in global investments for more than a decade, making the Japanese Yen one of the world’s cheapest sources of funding. With the Bank of Japan expected to tighten policy again this week, that advantage may be entering a new phase. While most major economies raised interest rates, Japan remained the world's outlier.