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Euro dips to 2-month low ahead of ECB meeting

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The Euro dropped to its lowest point in over two months on Thursday, anticipating a likely interest rate cut by the European Central Bank (ECB).


Meanwhile, the Dollar reached an 11-week high due to market optimism that Trump, seen as having more favourable policies, might win the US election. 


The British Pound strengthened slightly against the Euro to 83.54 pence but remained near Wednesday's two-month low against the greenback, following weaker-than-expected inflation data from the UK, Reuters reports.


Weak economic data in the eurozone and dovish remarks from European Central Bank officials have led traders to anticipate a third rate cut since June, reducing the Euro's attractiveness.


The ECB is expected to lower its deposit rate by 0.25% when it announces its policy decision on Thursday, followed by a press conference from President Christine Lagarde, during which markets will closely analyse her comments for hints about future policy actions.


“ECB might not commit to further rate cuts necessarily and I don't think that the impact on the Euro will be dramatically negative,” stated Roberto Mialich, forex strategist at UniCredit.


Money markets have nearly fully priced in three additional rate cuts by March 2025, aimed at curbing the eurozone's most prolonged inflation in decades.


The Euro declined by 0.1% to $1.085325, marking its seventh consecutive session of losses.


“The Euro has become much more fragile, especially as it continues to get closer to 1.08 or 1.0780,” as a decisive break below those levels would erase all gains made since August and could increase selling pressure further, Mialich added.


In addition, the Dollar index, measuring the currency against six peers, climbed to an 11-week high against a basket of currencies, reaching 103.65. 


The Dollar has been bolstered by a series of positive US economic data, which has led traders to lower their expectations of Federal Reserve rate cuts. 


In addition, the increased likelihood of a victory by Republican presidential candidate Donald Trump in next month's election has further supported the Dollar's strength.


“His core policies on tariffs, immigration, and taxes would produce a more inflationary outlook in the US, diminishing prospects for aggressive Fed rate cuts over the cycle,” according to Thierry Wizman, global FX and rates strategist at Macquarie.


Analysts forecast the greenback will strengthen if Trump wins, while bonds are likely to face increased pressure.

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Mauritius,
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Lithuania,

media contact

About

deVere Group – Foreign Exchange’s Public Relations Department deals with all areas of the media and external communications including international, national, regional, local, trade, consumer, print, broadcast, social and online. The Department aims to provide a helpful service to journalists, broadcasters and editors, amongst others, and reply to all media enquiries, including urgent enquiries out of hours, within agreed deadlines.

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Our press office does not have access to client details and will not be able to assist with individual client enquiries. Please contact deVere Group – Foreign Exchange’s Head of Public Relations on [email protected] or call +44 2071220925.