Get ready for the ECB policy decision today at 815pm SG time, followed by Lagarde’s press conference at 845pm SGT. With softer CPI prints out of Euro-area, Germany, and Spain, along with weaker mfg PMI readings, expectations are high for the ECB to lower rates again, according to OCBC’s FX analysts Frances Cheung and Christopher Wong.
ECB Likely to Cut Rates
Market sentiment suggests a 25bp cut at this meeting and a total of 38bp cut for the remainder of the year (a 1.5 cut in total). While a rate cut decision seems inevitable, all eyes are on Lagarde’s press conference and the staff’s macroeconomic projection. ECB officials have not been overly dovish so far, hinting at a more gradual approach to policy easing.
There is a possibility that the ECB may downplay the event if they emphasize that policy decisions are data-dependent and not on a fixed cycle. The EUR is currently at 1.1010 levels, with a bearish momentum on the daily chart and falling RSI. Downside risks are prominent at the moment.
Key levels to watch include support at 1.0970 (50 DMA, 38.2% fibo retracement of 2024 low to high) and 1.09 (50% fibo), with resistance at 1.1060 (23.6% fibo) and 1.1080 (21 DMA).
### Analysis:
The European Central Bank is expected to announce a rate cut, with market sentiment already pricing in a reduction. The focus will be on Lagarde’s press conference and the staff’s economic projection. The EUR is currently showing bearish signs, with potential downside risks. Investors should pay attention to key support and resistance levels for trading decisions.