EUR/USD HOLDS BELOW 1.1473 DESPITE 1% REBOUND – ECB RATE CUTS AND US TARIFF RISKS WEIGH ON EURO
EUR/USD HOLDS BELOW 1.1473 DESPITE 1% REBOUND – ECB RATE CUTS AND US TARIFF RISKS WEIGH ON EURO
EUR/USD Rebounds but Remains Below Key Resistance
The EUR/USD pair experienced a 1% rebound overnight but failed to surpass the previous week's high of 1.1473.
This indicates that upward momentum is limited despite the short-term recovery.
ECB Cuts Rates Amid Economic Challenges
On April 17, 2025, the European Central Bank (ECB) reduced its deposit interest rate by 25 basis points to 2.25%, marking its seventh rate cut over the past year.
This decision aims to support the eurozone economy, which faces challenges from rising U.S. tariffs and weakening business confidence.
ECB Highlights Risks from Strong Euro and Trade Tensions
ECB President Christine Lagarde emphasized that a stronger euro and escalating U.S. tariffs pose deflationary risks to the eurozone economy.
She noted that these factors could dampen inflation and economic growth, prompting the ECB to adopt a more dovish and data-dependent stance.
Analysts anticipate that the ECB may implement additional rate cuts in the coming months, possibly in June, depending on the evolution of trade tensions and economic data.
This outlook suggests that the euro may face continued downward pressure.
The imposition of U.S. tariffs on EU imports is expected to negatively impact the eurozone economy.
The ECB projects that these trade tensions could reduce confidence among households and firms, further weighing on economic growth and inflation expectations.
