EUR/USD trading below 200-day moving average, ECB expected to deliver dovish cut
EUR/USD is currently trading below the key 200-day moving average level of 1.0873. Analysts at BBH FX predict that the European Central Bank (ECB) may announce a dovish 25 basis point cut today, which could further weigh on the Euro.
Potential impact of ECB rate cut
- The ECB is expected to reduce the key interest rate by 25 basis points, bringing it to 3.25%.
- ECB President Christine Lagarde may adopt a dovish tone during the post-meeting press conference, scheduled for 1:45 pm London time.
- The Eurozone economy is facing stagnation, with inflation below the ECB’s 2% target.
Market expectations and future rate path
Market participants are currently pricing in approximately 175 basis points of easing over the next twelve months. This projection suggests that the policy rate could potentially reach a low of 1.75% in the future.
Analysis and implications for investors
For investors and traders in the foreign exchange market, the ECB’s decision and accompanying statements could significantly impact the value of the Euro against the US Dollar. A dovish stance from the ECB may lead to further depreciation of the Euro, while a more hawkish tone could provide some support to the currency.