The European Central Bank meets this week to decide its latest interest rate and monetary policy moves.
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EURUSD trades at 1.0860, with resistance ahead at the 1.0950 level. Further gains can open the door to the 1.10 level, which was last seen in January.
According to ECB policy-maker Pablo Hernandez de Cos, the European Central Bank could begin cutting interest rates in June after another slowdown in eurozone inflation. His comments come after European inflation slowed unexpectedly last month, building on the case for the ECB to start lowering borrowing costs from record highs.
“As of today, the central scenario is that June could be the first interest rate cut,” De Cos said at an event.
Consumer price growth in the 20 nations using the single currency slowed to 2.4% in March from 2.6% a month earlier, beating expectations for a steady rate.
“The data has been a positive one, a further reduction in inflation, also in core inflation. Most importantly, it is compatible with the ECB’s March forecast,” the Bank of Spain Governor said.
In its quarterly projections, the ECB cut its forecast for price growth this year from 2.7% to 2.3% and said it expects inflation to fall to 1.9% in summer 2025.
“Let me stress that this is not an unconditional projection, that we will continue to receive information that will have to be carefully analysed,” De Cos said.
The central bank is expected to acknowledge the improved outlook at its meeting this week. However, June will be the earliest opportunity for a rate cut. US inflation data on Wednesday evening will guide the EURUSD, with Thursday’s ECB meeting defining the trend for the week ahead.