Euro Continues to Slide After ECB’s Policy Meeting

The euro has been on a downward trend since the European Central Bank (ECB) decided to keep interest rates unchanged last Thursday. The euro/dollar pair fell to 1.0900 from its previous close of 1.0935.

ECB Policy Decision

The ECB’s decision to maintain the deposit rate at 3.75% was in line with market expectations. The ECB’s statement hinted at a potential divergence in views among policymakers regarding future interest rate decisions.

Market Analysis:

The euro’s decline against the dollar reflects investor concerns about the weakening economic outlook in the Eurozone. The ECB’s decision to keep rates on hold suggests that policymakers are becoming more cautious about raising rates further, as doing so could stifle economic growth.

The statement released by the ECB after the meeting highlighted that policymakers observed “some important upward inflation indicators in May.” This suggests that there may be a split among ECB members regarding whether to cut rates at the next meeting.

Technical factors:

The euro/dollar pair is currently trading below its key support level of 1.0900. If the pair breaks below this level, it could fall further to 1.0800 or even 1.0700.

Overall Outlook:

The euro’s outlook remains bearish in the short term. The ECB’s dovish stance and concerns about the Eurozone economy are likely to continue to weigh on the currency. Investors should watch for any further signs of a split among ECB policymakers regarding future interest rate decisions.

What to expect next

The ECB’s next policy meeting is scheduled for September 2024. The US Federal Reserve is expected to maintain the “higher for longer” interest rates again in July 2024. The ongoing war in Ukraine and the COVID-19 pandemic continue to pose risks to the global economy.