empty
11.04.2025 12:42 PM
The ECB May Cut Interest Rates Twice

The euro is showing a sharp rally against the U.S. dollar. The EUR/USD pair has already reached a three-year high and shows no signs of slowing down.

Meanwhile, according to a survey of economists, officials at the European Central Bank are likely to cut borrowing costs several more times, though they are ultimately expected to follow the lead of the U.S. Federal Reserve.

This image is no longer relevant

Respondents anticipate consecutive quarter-point rate cuts in April and June, after which the deposit rate is expected to settle at 2%. Economists warn that U.S. trade policy poses significant risks, threatening to undermine eurozone economic growth. Escalating protectionist measures, including the imposition of tariffs and trade restrictions, could severely disrupt supply chains and reduce demand for European goods. Uncertainty in U.S. trade policy is creating instability in financial markets, deterring investors and complicating long-term planning for European businesses. Additionally, aggressive fiscal policies aimed at boosting domestic demand in the U.S. could strengthen the dollar, making European exports less competitive.

A key concern is the erratic attempts by the U.S. president to reshape the global order. His trade war has already roiled financial markets, fueled fears of a major economic collapse, and left world leaders unsure of how to respond.

The temporary truce proposed by Trump yesterday — a 90-day pause — provides time for negotiations, allowing the European Union to delay countermeasures. However, the U.S.-China standoff continues to intensify. The biggest challenge for the ECB in this situation is having to maintain the appearance of being in control in the face of Trump's unpredictability.

Clearly, the ECB is now operating in a radically different environment as U.S. tariffs become a reality, and the eurozone's monetary policy must adapt accordingly. Against this backdrop, the Governing Council is expected to cut rates by another 25 basis points at its April 17 meeting, ahead of a series of cuts likely later this year.

The latest inflation report from the eurozone indicates that rate cuts are not only possible but necessary — if not now, then when? Recent statements from policymakers suggest that many are open to a pause in April, but a significant number also support further easing.

Most survey respondents expect rates to reach neutral territory only by the third quarter of this year. While half of them pegged the neutral rate — one that neither restricts nor stimulates growth — at 2%, nearly as many economists believe it is already above that level.

Technical Outlook on EUR/USD

At present, buyers need to focus on reclaiming the 1.1325 level. Only then can the pair aim for a test of 1.1388. A break above this level could open the path toward 1.1427, although such a move would be difficult without support from major players. The ultimate bullish target would be the 1.1485 high. If the pair declines, I expect strong buyer interest only around the 1.1260 level. If there is no support there, it may be worth waiting for a retest of the 1.1217 low or opening long positions from the 1.1155 level.

Technical Outlook on GBP/USD

Buyers of the pound must reclaim the nearest resistance at 1.3047. Only then can they target 1.3108, which could be a tough level to breach. The final bullish target is the 1.3156 level. If the pair declines, bears will attempt to regain control at 1.2985. A successful break of this range would significantly damage the bullish outlook and push GBP/USD down toward the 1.2929 low, with the potential to reach 1.2866.

Jakub Novak,
Analytical expert of InstaForex
© 2007-2025
Summary
Urgency
Analytic
Pavel Vlasov
Start trade
Earn on cryptocurrency rate changes with InstaForex
Download MetaTrader 4 and open your first trade
  • Grand Choice
    Contest by
    InstaForex
    InstaForex always strives to help you
    fulfill your biggest dreams.
    JOIN CONTEST

Recommended Stories

Market fears nothing

The S&P 500 reached another all-time high, with rotation being the hallmark of the US equity market. Investors are aggressively buying up stocks that underperformed in the first half

Marek Petkovich 10:50 2025-07-11 UTC+2

What to Watch for on July 11th? A Fundamental Overview for Beginners

There are very few macroeconomic publications scheduled for Friday, but the volume is still greater than on any previous day this week. The UK will release GDP and industrial production

Paolo Greco 08:50 2025-07-11 UTC+2

GBP/USD Overview on July 11, 2025

The GBP/USD currency pair failed to consolidate above the moving average on Thursday, so the correction continues for now. Throughout Thursday, the GBP/USD pair was unable to hold above

Paolo Greco 07:15 2025-07-11 UTC+2

EUR/USD Overview on July 11, 2025

The EUR/USD currency pair spent Thursday calmly drifting lower. We continue to wait for the current correction to end and for the uptrend to resume. To be fair, this correction

Paolo Greco 07:08 2025-07-11 UTC+2

XAU/USD. Analysis and Forecast

Gold prices are maintaining positive momentum for the second consecutive day. Ongoing uncertainty surrounding U.S. President Donald Trump's trade policy and its impact on the global economy continues to weigh

Irina Yanina 19:24 2025-07-10 UTC+2

USD/CHF. Analysis and Forecast

Today, the USD/CHF pair retraced part of its decline from a new weekly low recorded during the Asian session and has temporarily paused its downward movement, stopping short

Irina Yanina 12:26 2025-07-10 UTC+2

Market dupes sellers

The split within the Federal Reserve, NVIDIA's successes, and a successful auction of 10-year US Treasury bonds allowed the S&P 500 to ignore the tariff chaos. Donald Trump announced tariffs

Marek Petkovich 12:02 2025-07-10 UTC+2

What to Watch on July 10th: Fundamental Event Overview for Beginners

Macroeconomic Report Analysis: There are very few macroeconomic publications scheduled for Thursday, and none of them are expected to be significant. So what could traders focus on today? The second

Paolo Greco 09:07 2025-07-10 UTC+2

GBP/USD Overview on July 10, 2025

On Wednesday, the GBP/USD currency pair maintained its downward movement, which is corrective in nature and could end at any moment. The price remained below the moving average line

Paolo Greco 07:26 2025-07-10 UTC+2

EUR/USD Overview on July 10, 2025

The EUR/USD currency pair continued to trade very calmly on Wednesday. The pair maintained a slight downward bias, as we've noted in all of our recent articles. However, the current

Paolo Greco 07:16 2025-07-10 UTC+2
Can't speak right now?
Ask your question in the chat.
Widget callback
 

Dear visitor,

Your IP address shows that you are currently located in the USA. If you are a resident of the United States, you are prohibited from using the services of InstaFintech Group including online trading, online transfers, deposit/withdrawal of funds, etc.

If you think you are seeing this message by mistake and your location is not the US, kindly proceed to the website. Otherwise, you must leave the website in order to comply with government restrictions.

Why does your IP address show your location as the USA?

  • - you are using a VPN provided by a hosting company based in the United States;
  • - your IP does not have proper WHOIS records;
  • - an error occurred in the WHOIS geolocation database.

Please confirm whether you are a US resident or not by clicking the relevant button below. If you choose the wrong option, being a US resident, you will not be able to open an account with InstaForex anyway.

We are sorry for any inconvenience caused by this message.