The EUR/USD pair gained modestly above the 1.0400 level, driven by a reversal in the US dollar's recent strength following disappointing US economic data. While the ECB lowered its key interest rate by 25 basis points as expected, the US dollar's pullback and uncertainty surrounding President Trump's trade policies continue to impact the currency markets.
EUR/USD traded with modest gains above the 1.0400 barrier. The US Dollar reversed recent gains on disappointing US data. The ECB reduced its key interest by 25 bps, as broadly estimated. The European currency managed to regain some balance vs. its US counterpart on Thursday, prompting EUR/USD to set aside three daily pullbacks in a row while sparking a corrective decline in the US Dollar Index , which saw part of its weekly gains trimmed.
Although the eurozone economy is still sluggish, recent surveys show some signs of improvement, and inflation remains just above the ECB's 2% target, justifying the rate cut. Later, at her press conference, President Christine Lagarde stated that the ECB is not planning to reduce interest rates below the neutral level to stimulate the economy. She emphasised that rate decisions are made based on current data without committing to a specific pace.
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