EURUSD Falls and Rate Cuts Expected Soon in Europe

EURUSD Analysis – The euro dropped to about $1.08, its lowest since February 29, following comments from a European Central Bank (ECB) official usually known for his strict views. These remarks increased the anticipation that the ECB might begin to lower interest rates soon. Joachim Nagel, head of the Bundesbank, mentioned last Friday that the ECB could think about reducing rates before summer as inflation moves closer to their 2% goal.

Nagel’s views align with an increasing number of officials who think a rate cut in June might be on the cards. Markets are now expecting a decrease in rates by 89 basis points throughout the year, translating to three or four cuts of 25 basis points each, with the initial reduction possibly in June or July. Nevertheless, Nagel warned that the first cut should not automatically lead to more, highlighting the ECB’s commitment to a strategy based on actual data. Conversely, the US Federal Reserve is expected to begin its rate reductions in June.

EURUSD Falls and Rate Cuts Expected Soon in Europe