The Euro was marginally firmer on Thursday before the European Central Bank's (ECB) policy meeting.

Indeed, the single currency rose 0.11% to $1.0882, just under a two and a half month high of $1.0916 reached earlier in the week. 

A rate reduction at Thursday's meeting has been anticipated for some time, and the recent strengthening of the Euro against the Dollar reflects investors lowering their expectations of significant additional rate cuts this year. 

Whilst in contrast, there has been a slight increase in bets on monetary easing in the US this week, Reuters reports.

As it stands, markets are pricing around 63 basis points of cuts by the ECB in 2024, with a 25-basis point reduction at Thursday’s meeting, and an additional one or two by the end of the year.

“Should they surprisingly hold, the Euro could face a brief earthquake... but a cut looks almost guaranteed and is fully priced in, so the attention will be on communication,” stated Francesco Pesole, ING FX strategist.

“We think it is likely there will be almost no new forward guidance, with the ECB potentially signalling any further easing would only be gradual - in line with (policy makers') off-meeting comments - and that there are still risks to inflation.”

The Euro was slightly firmer against Sterling at the time of writing at 85.03 pence, yet close to the bottom of its recent range. Whilst against the Dollar, the Pound edged up to $1.2795. 

In the US, investors are also considering the implications for the Federal Reserve in light of several pieces of US data this week, which indicate a moderation in employment growth, although there has been an increase in service sector activity.

Currently, markets are pricing in nearly 50 basis points of Federal Reserve rate cuts for this year, with the first forecast to occur in September.