The pair showed resilience against the risk of a European Central Bank (ECB) event, maintaining stability despite ECB President Christine Lagarde's refusal to adopt a particularly dour stance. The euro got a little lower at the end of the trading session, but the currency pair continued to hover around the 1.05 mark.
Analysts from ING noted that the guidance for eurozone interest rates is decreasing, with expectations that rates may exceed the neutral threshold of 2.00/2.25%.
The expansion of the Italian: German sovereign bond was seen more as a result of profit taking and positional changes than as a result of the ECB's awareness of the possible economic recession in the eurozone.
The spread has previously been very narrow, suggesting that the current move is not a sign of wider concern about the ECB's monetary policy direction.
The EUR/USD pair is expected to stay close to the 1.05 level for the day. Market participants are looking forward to the next meeting of the Federal Open Market Committee (FOMC) on Wednesday, which is expected to be the next important event that will affect the dollar.
Those with short positions in EUR/USD are expected to hold their position, as it is considered a bullish position. The short-term trading range is expected to be between 1.0450 and 1.0550.
In Switzerland, the Swiss National Bank (SNB) opted for a more conservative 50 basis point rate cut. Martin Schlegel, the new President of the SNB, said that he was not a fan of negative interest rates but admitted that the bank was prepared to implement them if necessary.
Although he is not entirely sure about a negative rate position for the SNB next year, ING maintains that the SNB is unlikely to cut rates as deeply as the ECB, predicting a downward trend for the pair.
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