Trading about the 1.1350 level, the EUR/USD pair slipped throughout Thursday’s European session as investors prepared for the European Central Bank’s (ECB) interest rate decision set for 12:15 GMT. Markets predict the ECB to lower its main rates by 25 basis points, to 2.4% for the Main Refinancing Operations Rate and 2.25% for the Deposit Facility Rate.
This expected action would be the sixth consecutive one and the seventh rate drop since the ECB started its lowering cycle in June. The steady rate cuts show increasing confidence that Eurozone inflation will reach the ECB’s 2% goal by year-end. Worries about the area’s declining economy have intensified hopes for further monetary help.
Although the rate reduction seems inevitable, market players will keenly monitor ECB President Christine Lagarde’s news conference for analysis on the future course of policy. Any reaffirmation that present rates stay limiting could strengthen the prospect for more easing in the next months.
Investors will also be paying attention to remarks on the effects of U.S. trade policies under President Donald Trump, especially over how possible tariffs would influence the already weak Eurozone economy. The EU is still negotiating with Washington, but the area is exposed. China’s continual change in export policy, which can send goods to Europe in line with its conflicts with the United States, could also affect ECB decisions.
Market Movers: USD Rebound Weakens EUR/USD
As the U.S. Dollar recovered ground close to recent lows, EUR/USD retreated from the key 1.1400 level. Rising to about 99.60, the U.S. Dollar Index (DXY) tracked the dollar versus a basket of six major currencies under fresh purchasing activity.
Positive news in trade negotiations between the United States and Japan helped the USD to gain momentum. President Trump wrote on TruthSocial on Wednesday about meeting with Japanese officials, “Big Progress!” in the bilateral trade talks—remarks that raised investor mood and allayed concerns of intensifying world trade conflicts.
Many believe Trump’s change to one-on-one trade talks instead of sweeping tariff penalties will help to stabilise the world economy. The ongoing trade spat between the United States and China, nevertheless, still poses a problem. The present impasse has turned into a diplomatic one, with the U.S. indicating it’s up to China to act first. White House Press Secretary Karoline Leavitt said, “The ball is in China’s court,” according to Reuters.
At home, the greenback struggles against worries about inflation and decelerating economic development. Though he had a somewhat positive view, Federal Reserve Chair Jerome Powell admitted on Wednesday that economic growth probably slowed in Q1 2025. Until there is greater clarity on important economic indicators, Powell restated the Fed’s “wait and see” position.
Technical Outlook: Key Support Holds Above EUR/USD
During the European session, EUR/USD fell back after failing to maintain momentum over the 1.1400 resistance. Notwithstanding the decline, the pair keeps a bullish structure backed by rising short- to long-term Exponential Moving Averages.
Strong bullish momentum is shown by the 14-day Relative Strength Index (RSI), which stays above the 70 mark.
From the upside, a significant resistance area is the 1.1500 level. Key support to the downside is at the April 11 low of 1.1190, which Euro bulls will seek to protect.
