EUR/USD exchange rate flat following ECB rate cut
The euro US dollar (EUR/USD) exchange rate is trading mostly flat this morning following the European Central Bank’s (ECB) latest interest rate decision.
At the time of writing, the EUR/USD exchange rate is trading at around €1.1095, virtually unchanged from this morning’s opening rate.
Euro (EUR) flat after ECB interest rate cut
The euro (EUR) is stable against most major currencies this morning following the European Central Bank’s (ECB) latest interest rate decision yesterday. As anticipated, the ECB implemented its second rate cut of the year.
Despite the rate reduction, the euro has remained steady during today’s European session, bolstered by a speech from ECB President Christine Lagarde following the decision.
While the central bank lowered its growth forecasts for the near future, Lagarde emphasized the importance of being ‘data-driven’ in shaping future monetary policy in the Eurozone.
Christine Lagarde said:
‘We will keep policy rates sufficiently restrictive for as long as necessary to achieve this aim. We are not pre-committing to a particular rate path.’
US dollar (USD) undermined by Fed rate cut bets
The US dollar (USD) is struggling to garner investor attention this morning as a lack of fresh data releases has left the ‘greenback’ vulnerable to shifts in Federal Reserve interest rate cut bets.
Just a week ahead of the Fed’s upcoming interest rate meeting, markets are anticipating the central bank will lower its current base rate.
However, speculation over whether the Fed will cut rates by 25-basis points or by 50 has seen USD exchange rates trend lower in recent weeks.
Following a slew of underwhelming data, bets of a 50-basis point cut have risen which in turn has seen the ‘greenback’ trade near yearly lows.
As US data will be thin on the ground for the remainder of the day, USD exchange rates will likely remain on the back foot.
EUR/USD forecast: US retail sales in the spotlight?
Looking ahead, the primary catalyst of movement for the euro US dollar exchange rate looking ahead to the start of next week will likely be the latest US retail sales data, scheduled for release on Tuesday.
August’s index is forecast to fall from a previous reading of 1% to 0.2%, and will likely undermine the ‘greenback’ a day ahead of the Federal Reserve’s upcoming interest rate decision.
Turning to the pound, a lack of significant UK economic data in the first half of the week may leave GBP exchange rates mostly directionless.
However, Wednesday’s release of the UK’s latest Consumer Price Index (CPI) could stir volatility into Sterling.
If the inflation figures fuel expectations of a potential interest rate cut from the Bank of England (BoE), the pound could dip against its peers.