Greetings foreign exchange buddies! It appears to be like just like the European Central Financial institution held rates of interest as-is on April eleventh, 2024:

• Marginal Lending Fee: 4.75%
• Deposit Facility Fee: 4.0%
• Essential Refinancing Fee: 4.5%

Hyperlink to ECB’s April 2024 Coverage Choice press launch

This was a extensively anticipated consequence and of their assertion, they famous that if the upcoming replace on inflation dynamics elevated confidence in sustainably reaching their goal, then it could be applicable to scale back financial coverage restriction.

Mainly, they remained information dependent total on the way forward for price cuts, however they did sign that June’s information would probably be sufficient to get the bulk on board with lowering charges if the information warrants it.

Past June, members have been blended on when the subsequent price minimize could come, with some in search of one other one as quickly July, whereas others leaned in direction of one minimize per quarter.

Market Reactions

Euro vs. Main Currencies: 5-min

Overlay of EUR vs. Main Currencies 5-min Foreign exchange Chart by TradingView

The assertion launch sparked an preliminary selloff within the euro towards the most important currencies, sentiment that lasted proper into the ECB press convention.

It was there that the euro discovered a brief backside and bounced for the subsequent hour, probably on ECB President Lagarde tempering June minimize expectations a bit by saying the speed minimize path just isn’t pre-determined and will probably be information dependent.

Lagarde additionally pushed again on narratives that the ECB could also be influenced by the Fed and it’s price path (now seeing decrease odds of cuts after stronger-than-expected inflation information this week from the U.S.), saying that “we’re information dependent – we’re not Fed dependent.”

This divergent outlook could have been the spark for the broad transfer decrease within the euro put up press convention, particularly the swift drop in EUR/USD heading into the London shut.

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