The Euro Stabilise Before The ECB’s Policy Decision

6 Haziran 2024

Today market analysis on behalf of Robert Brown, Head of Strategic Development at MAS Markets.

The euro continued to trade sideways, stabilizing against the US dollar after declining in the previous two sessions. While it has seen significant price movements for the past year, the currency pair has been moving horizontally and remained within a limited price range until now. The market is preparing for the European Central Bank (ECB) policy decision as it anticipates a rate cut. This is despite inflation accelerating to 2.6% in May. The market widely expects a reduction in borrowing costs, with additional cuts projected for the remainder of the year.

However, uncertainty remains regarding the next phase in monetary policy as the number and pace for the next rate cuts are still unclear. The central bank is likely to remain cautious, adhering to its data-dependent stance, and could avoid providing any guidance on its policy outlook leaving market participants to deal with the uncertainty. In this regard, the European currency as well as European treasury yields could see an increase in volatility and trading volumes as traders work on updating their expectations in reaction to any new clues from the ECB.

 

ZAID BAREM / YMM