The EUR/USD exchange rate is declining for the fourth consecutive day, trading around 1.0350, as the European Central Bank (ECB) signals a continued dovish approach to interest rate policy. The ECB anticipates lowering its Deposit Facility rate to 2%, the neutral rate, by June 2025. Meanwhile, the US Dollar Index surged to multi-year highs following the Federal Reserve's (Fed) hawkish policy shift, indicating potential US interest rate increases.
EUR/USD faces headwinds as the ECB sustains its dovish stance on interest rate policy for 2025. The ECB is anticipated to reduce its Deposit Facility rate to 2%, regarded as the neutral rate, by June 2025. The US Dollar Index surged to multi-year highs following the Federal Reserve 's hawkish policy shift. EUR/USD continues to lose ground for the fourth successive day, trading around 1.0350 during the Asian hours on Thursday.
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. The ECB’s primary mandate is to maintain price stability, which means either controlling inflation or stimulating growth. Its primary tool is the raising or lowering of interest rates. Relatively high interest rates – or the expectation of higher rates – will usually benefit the Euro and vice versa.
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