The market is waiting for strong evidence of additional cuts this year.
Hopes of narrowing interest rate gap between Europe and the United States
The euro fell in the European market on Thursday against a basket of global currencies, giving up its highest level in four months against the US dollar, and may record its first loss in the last three days, as there is clear activity in correction operations and profit-taking, in addition to the reluctance to build new purchasing positions while awaiting monetary policy decisions at the end of the European Central Bank meeting.
The bank is unlikely to cut interest rates for a second consecutive meeting, but it will announce more evidence of additional rate cuts before the end of this year, in light of recent developments in the eurozone economy.
Price overview
Euro exchange rate today: The euro fell against the dollar by 0.1% to ($1.0928), from the opening price of ($1.0939), and recorded a high of ($1.0941).
The euro ended Wednesday's trading up 0.4% against the dollar, in its second daily gain in a row, and recorded a four-month high of $1.0948, due to continued selling of the US currency in the foreign exchange market. European Central Bank Global financial markets are eagerly awaiting the results of the European Central Bank's monetary policy meeting today, Thursday, amid important developments for the economy in the euro zone, especially after the acceleration of inflation in May and June, as European interest rates are expected to remain unchanged at 4.25%.
The European Central Bank cut interest rates for the first time in June since 2016, after its strongest rate hike in a decade, but refrained from committing to any further moves, arguing that too much uncertainty prevented a second cut.
The European interest rate decision and monetary policy statement are due at 13:15 GMT, and ECB President Christine Lagarde speaks at 13:45 GMT.
European interest rate cuts Inflation data and comments from European Central Bank officials have reduced the chances of further European interest rate cuts this year. Markets have reduced pricing in cuts from 75 basis points to less than 50 basis points this year.
Getting fresh clues on the future path of European interest rates and the likelihood of further cuts this year is now the top focus for global markets.
US interest rates Following less aggressive comments from Federal Reserve Chairman Jerome Powell at the Economic Club on Monday, the pricing of the probability of a US interest rate cut of about 25 basis points in September rose from 94% to 100%, and the probability of a cut in November rose from 98% to 100%.
Interest Rate Gap The interest rate gap between Europe and the United States is currently 125 basis points in favor of US rates. Given the current odds on European and US interest rates, the gap is expected to narrow again to 100 basis points in September.
