EUR/USD: Euro Eyes $1.11 After ECB Cuts Rates to 3.5%, US Dollar Retreats Broadly
The EUR/USD pair climbed toward the $1.11 mark after the European Central Bank (ECB) lowered interest rates by 25 basis points to 3.5% on Thursday. This was the second rate cut in Europe this year, driven by easing inflationary pressures, and it reinforced the broader trend of central banks reducing rates. Meanwhile, the US dollar lost some ground ahead of the Federal Reserve’s rate-setting meeting on September 18.
“Labor cost pressures are moderating, and profits are partially absorbing the impact of higher wages on inflation,” the ECB stated. “Financing conditions remain tight, and economic activity is still subdued, reflecting weak private consumption and investment.” Inflation data for August, as measured by the consumer price index, fell to a three-year low of 2.2%, edging closer to the ECB’s 2% target.
The euro has been fluctuating around the $1.11 level for some time, having hit a 2024 high of $1.12, marking a gain of over 5% from its 2024 low of $1.0600.
