Euro Rebounds to $1.14 after ECB Rates Cut

Euro Rebounds to $1.14 after ECB Rates Cut

The euro is gaining against the US dollar in the forex market early on Monday. The euro rebounded above the $1.14 level, edging closer to the six-week high of $1.149 reached on June 5—after the European Central Bank (ECB) rates cut last week.

The ECB cuts interest rates by 25 basis points to boost economic growth amidst uncertainties over trade direction with the United States.

The Central Bank said the decision to lower the deposit facility rate—the rate through which the Governing Council steers the monetary policy stance—is based on its updated assessment of the inflation outlook, the dynamics of underlying inflation, and the strength of monetary policy transmission.

The market reacted positively to the monetary policy easing around the Eurozone, and the monetary action has caused a spike in demand for the euro. The EURUSD had depreciated to $1.13 after brushing with $1.1390 in efforts to maintain the upside swing, which had reached a one-month high of $1.1418.

The market position last week placed the US dollar on the upside amidst seemingly unending trade talks between the US and China over reciprocal tariffs. But the dollar eased during early trading hours on Monday as better-than-forecast U.S. jobs data failed to provide lasting support to the U.S. currency.

At the same time, the euro regained balance as investors continued to track progress in US-China trade talks and looked ahead to key speeches from European Central Bank officials for insight into the ECB’s policy outlook.

Top US and Chinese negotiators are set to meet in London today, aiming to build on last month’s preliminary agreement in Geneva, with discussions likely to focus on rare-earth minerals and advanced technology.

The ECB cut interest rates by 25 basis points last week—bringing borrowing costs to their lowest since November 2022—and lowered its inflation projections for 2025 and 2026. However, the bank also signaled it may be nearing the end of its current easing cycle, contrary to earlier expectations. Yield Slides on Post Auction Demand for Nigerian Treasury Bills