The euro was slightly lower on Thursday. At the start of the North American session, EUR/USD was trading at 1.0919, down 0.18% from the previous day. The euro has not had a lower day since July 9th, and is up 1% in that period.
ECB keeps interest rates at 3.75%
The European Central Bank kept its key lending rate unchanged at 3.75% at its meeting today, following a quarter-point rate cut in June. The decision to keep rates unchanged was widely expected, especially after the June rate cut, and the euro had a subdued day. Markets are focused on ECB President Lagarde's press conference in hopes of providing clues on future interest rate policy.
The rate statement noted that “service inflation is high and headline inflation is expected to remain above target next year.” The market was not spooked by the hawkish comments, as the ECB had signaled in June that it was ready to cut rates even if inflation rose above 2%.
Markets are pricing in two more quarter-point cuts, in September and December. ECB policymakers have been cautious, reiterating in their rate statement that the ECB is “not committing itself in advance to a particular interest rate path.” ECB officials stressed that inflation remains high and that wage growth, which is driving services inflation, would need to fall for the ECB to feel confident about further rate cuts.
In the US, attention will be focused on the Federal Reserve's comments this week, with FOMC members scheduled to speak publicly five times. With a rate cut in September widely expected in the market, investors are hoping to gain insight into the Fed's interest rate policy.
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EUR/USD Technical
EUR/USD is testing the support at 1.0928, below which there is support at 1.0907 with the next resistance at 1.0960 and 1.0981.