EUR moves ahead of expected 25bp cut – Scotiabank

Today’s ECB decision is expected to result in a 25bp cut in the main target rate to 3.50%, notes Shaun Osborne, chief FX strategist at Scotiabank.

The focus is on ECB guidelines

“The key focus for markets will be more on the guidance from President Lagarde’s statement and press conference. Markets are betting on another 38 basis points of easing in Q4, but it is not clear that the ECB will cut rates as quickly as markets currently expect.

“A cautious outlook for further easing would suggest the ECB is comfortable maintaining its pace of 25bp per quarter, which could extend EUR support a bit.”

“Spot is tracking a bit more intraday, but the overall tone for spot looks soft after yesterday’s failed rally and rejection of levels above 1.1050. Support in the low 1.10s holds, but momentum tilts risks to a bit softer and a test of support in the 1.09s.”