EUR/USD 5 min
It has been a tough short-term trade due to the ECB rate cut.
The move was expected and the market is fully pricing in another 25bps cut in January, with a good chance of a 50bps cut in March or sooner.
What may have weighed on the euro initially was a downgrade to growth forecasts to 1.1% in 2025 from 1.3%. The 'ECB Sources' report also indicated some skepticism among policy makers is too high, especially with the risk of taxes.
The euro has been nervous, partly due to broader US dollar volatility after a tepid PPI report was weighed against a worrisome jobless claims report. The Fed is well on track to cut rates next week but what happens in 2025 is highly controversial with 50-75 bps in rate discounting.
China is also a driving factor in all markets today as the Work Conference reading did not offer much in the way of concrete action to stimulate growth or consumption.
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