The euro traded just above $1.175, near its recent four-year peak of $1.192, as investors awaited key economic data and policy pronouncements from the European Central Bank and the Federal Reserve. The market is assessing the potential implications of divergent monetary policy stances between the two central banks.
- The euro traded just above $1.175.
- It hovered near last week’s four-year high of $1.192.
- Investors awaited the HCOB flash PMI survey, monetary indicators, and speeches from ECB and Federal Reserve officials.
- The ECB signaled its rate-cutting cycle may be over, citing persistent inflation risks.
- The Federal Reserve cut interest rates for the first time since December and indicated further cuts.
- Fed Chair Powell described the rate cut as a “risk management” adjustment.
The euro’s strength seems to be supported by the perception that the European Central Bank is nearing the end of its easing cycle, while the Federal Reserve has initiated a rate-cutting policy. If inflation remains elevated in the Eurozone, the ECB may maintain a tighter stance than previously expected, potentially leading to further euro appreciation. The Federal Reserve’s approach, characterized as a “risk management” adjustment, introduces some uncertainty about the extent and duration of future rate cuts, which could also influence the euro’s trajectory.