The European Central Bank decrees its fifth consecutive interest rate cut, sets the price of money at 2.5%, and anticipates that the next monetary decisions are not at all clear. Huge uncertainty". "Uncertainty everywhere".
FX traders are facing a monumental recalibration as the ECB prepares for its next move. Germany’s seismic fiscal shift has fueled the euro’s rally, but the real test will come in April when the ECB must decide whether to continue cutting rates or adjust to Europe’s new spending reality.
The EUR/USD pair reached levels not seen since last November, settling not far below 1.0888, the Friday high. The US Dollar’s (USD) sell-off was the result of tepid United States (US) data and mounting fears President Donald Trump’s tariffs will result in an economic setback.
The ECB has cut rates five times since June as inflation retreated and economic growth faltered. But with rates slowly approaching a level that no longer restricts economic growth, one might expect an end to the easing cycle.