The euro is once again in the spotlight of investors. In addition to new reports on tariffs (direct impact on the dollar) and military investment in the expansion of European military capabilities (increasing yields on German Bunds, among others, and limiting the long-term scope of ultra-dovish ECB decisions), investors will be closely analysing today’s comments from President Lagarde, who will comment on the latest decision by the Central Bank. It is widely believed (and already priced in) that the ECB will cut all 3 main rates by 25 basis points today.
Goldman Sachs raised its 2025 growth forecast for the eurozone by 0.1 percentage points to 0.8%, citing increased military and infrastructure spending, particularly in Germany. The bank expects the ECB not to cut interest rates in July, contrary to its earlier forecast of a 25 basis point move. Higher economic growth and further uncertainty regarding US-European tariffs policy mean that the ECB must calmly analyze all aspects that could potentially affect the increase or decrease in price pressure, especially since the bank is already in the late stages of easing monetary conditions.
Falling prices of German Bunds (also today) support the euro against the dollar from a purely fundamental point of view. However, it is worth bearing in mind that the 14-day scale of increases in the pair based on RSI is the largest since August 2024, so the chance for further such large increases in the short term may be somewhat more difficult. Source: xStation
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