The European Central Financial institution (ECB) is holding its two-day assembly and can announce its financial coverage determination on Thursday. The ECB is broadly anticipated to maintain rates of interest on maintain for the fifth consecutive assembly, leaving the primary refinancing operations, the marginal lending facility, and the deposit facility at 2.15%, 2.4%, and a pair of%, respectively.
Moreover, ECB President Christine Lagarde will maintain a press convention afterward to elucidate policymakers’ reasoning behind the choice.
Forward of the announcement, the EUR/USD pair trades above the 1.1800 mark, stabilizing after retracing sharply from January’s peak at 1.2082.
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What to anticipate from the ECB rate of interest determination?
The ECB is in an excellent place and plans to stay there, refraining from any additional financial coverage motion. The ECB was among the many first main central banks to chop charges after post-pandemic inflation peaks that drove multi-decade highs in charges. President Christine Lagarde’s newest mantra has been that financial coverage is in a “good place,” and is anticipated to repeat the message.
The Governing Council determined to maintain charges unchanged at its December assembly, providing no contemporary clues about future motion. As ING famous, “The minutes of the ECB’s December assembly verify the ECB’s wait-and-see stance in a macro setting, through which the bottom case appears to be like very benign, however dangers stay unusually excessive.”
Within the meantime, macroeconomic knowledge launched within the final couple of months verify officers’ stance. The Euro space financial system has not solely been resilient however is lastly displaying indicators of enchancment.
In response to the newest Eurostat knowledge, the European Union (EU) grew by 0.3% quarter-on-quarter within the three months to December, whereas the 2025 Gross Home Product (GDP) grew by 1.6% year-on-year.
Within the meantime, inflation cooled down in January, as anticipated. Eurostat reported that the Harmonized Index of Shopper Costs (HICP) rose 1.7% within the yr to January as anticipated, whereas easing from the 1.9% posted in December. The core HICP, which excludes unstable parts similar to meals or vitality, rose by 2.3% as anticipated, matching the earlier month’s determine.
Lastly, it’s value remembering that, talking after the ECB’s ultimate Governing Council assembly, President Lagarde made it clear that, on condition that financial coverage is in a “good place,” this doesn’t indicate a set or predictable path for charges. She additionally emphasised the ECB’s meeting-by-meeting strategy.
On this state of affairs, the upcoming financial coverage determination is prone to be a non-event. The overall consensus is that the ECB will preserve its hawkish stance and that President Lagarde will repeat the message that the ECB is in wait-and-see mode, attentive to financial developments with no pre-set financial path.
How might the ECB assembly affect EUR/USD?
The EUR/USD pair is steady above 1.1800 forward of the announcement, following unstable worth motion over the earlier two weeks. The EUR/USD pair additionally trades roughly 300 pips beneath its current peak, but retains most of its 2025 positive factors.
Valeria Bednarik, FXStreet Chief Analyst, notes: “Technically talking, the EUR/USD pair bearish case appears well-limited. Within the each day chart, the pair holds properly above all its shifting averages, with a bullish 20-day Easy Shifting Common (SMA) heading north above the 100 and 200 SMAs whereas offering help at round 1.1760. On the identical time, technical indicators have picked up after nearing their midlines, presenting uneven upward power on the time of writing.”
Bednarik provides: “The EUR/USD pair bottomed at round 1.1775 earlier within the week, making the 1.1760-1.1770 space the instant downward barrier. A slide beneath the extent exposes the 1.1700 threshold, en path to the 1.1640 worth zone. Bulls can be in search of a restoration past 1.1920 so as to add longs, aiming for a take a look at of the 1.2000 mark.”