The euro has edged lower ahead of today’s rate annoucement from the European Central Bank. In the European session, EUR/USD is currently trading at 1.0396, down 0.23% on the day.

ECB projected to lower rates to two-year low

The European Central Bank is widely expected to deliver a 25-basis point rate cut at today’s meeting, which would bring the deposit rate to 2.75%. This would be the lowest rate since December 2022. The ECB has telegraphed its intention to cut at today’s meeting, which should mean that the reaction in the financial markets will be muted. Investors will be monitoring the rate statement and President Lagarde’s press conference for any change in the ECB’s policy stance.

The ECB has been aggressive in its easing cycle, as today’s expected cut would be the fifth since June 2024. What’s next? The central bank is under pressure to continue lowering rates for domestic and external reasons, and the markets are looking at three more reductions in 2025, which would bring the deposit rate to 2%. With the Federal Reserve looking at only one or two rate cuts this year, the US/Europe rate differential will likely widen, which would push the euro closer to parity.

The eurozone economy is in trouble and among the largest economies in the bloc, only Spain is performing well. There is political instability in Germany and France which is only adding to market nervousness over the eurozone. As well, the growing threat of tariffs from US President Trump could further dampen eurozone growth and destabilize the financial markets. The ECB may need to cut faster and deeper if Trump hits the eurozone with tariffs.

Fed holds rates, as expected

The Federal Reserve maintained the benchmark rate at a range of 4.25-4.5%, as expected. It was the first hold after three straight rate cuts. Fed Chair Powell sounded hawkish and stated that the Fed was “in no hurry” to lower rates. The markets are expecting one or two cuts this year and Bank of America recently said that the easing cycle could be over and the next move will likely be a rate cut. President Trump responded angrily to the rate announcement, saying that the Fed had done a “terrible job” and was responsible for inflation.

EUR/USD technical

EUR/USD is testing support at 1.0415. Below, there is support at 1.0387.

There is resistance at 1.0449 and 1.0477.

EURUSD

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors — not necessarily OANDA’s, its officers or directors. OANDA’s Terms of Use and Privacy Policy apply. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Recommended Content


Recommended Content

Editors’ Picks

EUR/USD gathers traction toward 1.0450 amid US Dollar weakness

EUR/USD gathers traction toward 1.0450 amid US Dollar weakness

EUR/USD regains upside traction and nears 1.0450 in the European trading hours on Thursday. Broad US Dollar weakness supports the pair. However, tariff threats from US President Donald Trump and geopolitical tension might cap its upside. US data and Fedspeak remains in focus. 

EUR/USD News
Gold rallies with yields taking a step back

Gold rallies with yields taking a step back

Gold is printing another fresh all-time high at around $2,955. US President Donald Trump took markets by surprise when he mentioned a trade deal with China could be done. If US yields drop off further, expect to see more all-time highs in Gold this week.

Gold News
GBP/USD holds ground above 1.2600, awaits US data

GBP/USD holds ground above 1.2600, awaits US data

GBP/USD holds ground above 1.2600 in the European session on Thursday. The pair is helped by a sustained US Dollar weakness but broad risk-off mood due to renewed tariff threats from US President Donald Trump could limit the risk sensitive Pound Sterling. US data is next in focus. 

GBP/USD News
Stellar Price Forecast: XLM’s Total Value Locked reaches over $62 million

Stellar Price Forecast: XLM’s Total Value Locked reaches over $62 million

Stellar (XLM) price trades inside a channel pattern; a breakout indicates bullish momentum. Crypto intelligence tracker DefiLlama data shows that XLM’s TVL reaches $62 million while the technical outlook projects a target of $0.74.

Read more
Money market outlook 2025: Trends and dynamics in the Eurozone, US, and UK

Money market outlook 2025: Trends and dynamics in the Eurozone, US, and UK

We delve into the world of money market funds. Distinct dynamics are at play in the US, eurozone, and UK. In the US, repo rates are more attractive, and bills are expected to appreciate. It's also worth noting that the Fed might cut rates more than anticipated, similar to the UK. In the eurozone, unsecured rates remain elevated.

Read more
The Best brokers to trade EUR/USD

The Best brokers to trade EUR/USD

SPONSORED Discover the top brokers for trading EUR/USD in 2025. Our list features brokers with competitive spreads, fast execution, and powerful platforms. Whether you're a beginner or an expert, find the right partner to navigate the dynamic Forex market.

Read More

Majors

Cryptocurrencies

Signatures

Best Brokers of 2025