EUR/USD Price Analysis: Euro Rises On Eve Of ECB Rate Decision

By Saqib Iqbal of ForexCrunch

Jan 24, 2024 at 8:24 AM EST

Eurozone consumer confidence fell in January. The ECB will likely pause interest rate hikes in the upcoming meeting. Investors will scrutinize ECB chief Christine Lagarde’s press conference for indications of the future direction of rates.

Wednesday witnessed a slight bullish tilt in the EUR/USD price analysis ahead of the pivotal European Central Bank rate decision. Additionally, investors were awaiting key PMI data from the Eurozone and the US.

On Thursday, investors will focus on the ECB chief Christine Lagarde’s press conference, seeking crucial clues about the future trajectory of interest rates.

There’s a consensus that the ECB will likely pause interest rate hikes in the upcoming meeting. However, traders foresee potential cuts totaling approximately 130 basis points throughout the year. Moreover, the likelihood of the first cut in June is nearly 97%.

Elsewhere, data released on Tuesday revealed a decline in Eurozone consumer confidence for January compared to December.

Meanwhile, the dollar pulled back slightly but remained firm due to the Fed’s cautious approach towards interest rate cuts. In her last remarks before the January 31 policy decision blackout period, San Francisco Fed President Mary Daly stated that monetary policy is in a “good place,” and it’s premature to expect imminent rate cuts.

Similarly, Fed Governor Christopher Waller emphasized a “careful and slow” approach to rate cuts. James Kniveton, senior corporate FX dealer at Convera, noted that markets no longer expect imminent rate cuts, which is supporting the dollar.

This trend aligns with a broader resistance to rate cuts among major central banks. Kniveton added, “We have seen ECB officials push back on rate cut expectations as well, just like the Federal Reserve.”

EUR/USD key events today

German flash manufacturing and services PMI
US flash manufacturing and services PMI

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