The EUR/USD retreated on Tuesday after the latest inflation report in Germany, which increased the likelihood of another interest rate cut by the European Central Bank (ECB).
German HICP inflation falls to 2%, increasing the likelihood of further ECB rate cuts and downward revisions to growth forecasts. ECB expected to lower rates by 25 bps while maintaining a restrictive policy stance to combat inflation risks. US CPI data could influence Fed rate expectations, with a 70% chance of a 25 bps cut and 30% for a 50 bps cut.
In 2022, it accounted for 31% of all foreign exchange transactions, with an average daily turnover of over $2.2 trillion a day. EUR/USD is the most heavily traded currency pair in the world, accounting for an estimated 30% off all transactions, followed by EUR/JPY , EUR/GBP and EUR/AUD . What is the ECB and how does it impact the Euro? The European Central Bank in Frankfurt, Germany, is the reserve bank for the Eurozone. The ECB sets interest rates and manages monetary policy.
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