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  • ECB cuts interest rates by 25bps to 3.5% ahead of next week's FOMC policy meeting

  • EURUSD takes a slight boost as policymakers maintain a data-dependent approach

 

The ECB cut its refinancing deposit rate for the second time by 25bps to 3.5% and slashed its marginal lending facility rate by 60bps to 3.90%. The latter was a technical adjustment. Therefore, there was no big surprise in the statement besides a slight upward revision in inflation forecasts and a marginal decline in growth projections.

With no dovish signals yet despite the weakening CPI and muted GDP data, EURUSD traded marginally up at 1.1028 at the time of writing and the focus is now on the press conference as the ECB chief explains the details behind the central bank’s decision.

The policy statement revealed preference for a data-dependent and meeting-to-meeting approach, but journalists might still ask if there is a possibility for a continuous rate cut cycle and whether aggressive rate cuts are necessary.

Technically, EURUSD could still attract fresh buying as long as it holds above 1.0990. The next resistance in this case could develop within the 1.1088-1.1100 region. It seems that the pair is trading within a bullish channel. Hence, only a decisive close below the bullish formation and the 1.0920 level could upset traders.