Euro Under Pressure as ECB Hints at Possible Rate Cut
In Europe, EUR/USD traded 0.2% lower at 1.0827, with the euro feeling the impact of the European Central Bank’s monetary policy meeting. Although the ECB opted to keep interest rates unchanged at a record-high 4%, it acknowledged that inflation declined more rapidly than expected during the previous autumn. This acknowledgment suggests that discussions regarding an initial rate cut may soon commence.
ING analysts noted, “The euro ‘lurched lower after President Christine Lagarde said she stood by the comments that she made last week that the ECB could cut this summer.’ The downside for EUR/USD looks open to the 1.0790/1.0800 area now, and 1.0875/1.0900 appears to be stronger resistance. There are risks next week that warn EUR/USD could become a 1.0715/25 story.”
German Consumer Sentiment Index Falls, Pound Stalls Ahead of BOE Decision
Earlier data released on Friday revealed that the GfK German consumer sentiment index dropped to -29.7 points in the lead-up to February, down from a revised -25.4 the previous month. This indicates that a sustained recovery for Europe’s largest economy is still some distance away.
GBP/USD traded 0.1% lower at 1.2693 as the Bank of England prepares to announce its latest interest rate decision next week.
USD/JPY Rises on Weaker Inflation Data in Tokyo
In Asia, USD/JPY rose 0.1% to 147.82 as data showed that consumer price index inflation in Tokyo declined more than expected in January. This suggests a potential similar trend in nationwide inflation.
USD/CNY traded 0.2% higher at 7.1809. The Chinese yuan retraced slightly after earlier gains this week when the People’s Bank of China reduced banking reserve requirements. This move sparked optimism about a potential economic recovery in China.
Improve Your Investment Strategy with Our AI-Powered Stock Picks
Elevate your investment game with InvestingPro+, our revolutionary AI-powered tool for stock picks.