Euro Stabilises at $1.1750 as ECB Pauses on Rates Cut
The Euro stabilised against the US dollar during early trading hours in the global forex market as the European Central Bank (ECB) paused rate cuts. The market has started to digest the European Central Bank decision to pause rates cutting amidst trade uncertainties and cheaper imports.
After eight cuts, ECB hit pause on its rate-cut cycle on Thursday. The decision to hold the key deposit rate at 2% matched consensus given that inflation has settled at comfortable levels—the -2% target. The decision endsseven straight cuts as the central bank deems export performance could be facing higher tariff threats.
At the meeting, the ECB noted the uncertainty sown by global trade disputes, and rate setters may indeed move to cut rates again in September. The deposit rate has been lowered from a 4% peak in 2024 to 2% in June. A stronger euro makes imports cheaper at the time President Donald Trump is threatening the zone with higher tariffs.
FX data highlights that the euro has gained 14% against the dollar this year. The market has now shifted to trade uncertainties as EU-US trade talks ahead of the August 1 deadline.
The EU’s trade relationship with the US, its largest partner, remains at risk, with negotiations ongoing and potential tariffs of up to 30% looming. The base-case scenario includes a 15% US tariff on EU goods, with possible EU countermeasures in development.
EU diplomats expressed skepticism about a near-term breakthrough, stating the final call lies with President Trump. The uncertainty is weighing on sentiment, even as both sides explore limited exemptions and tariff reductions as part of a possible deal. #Euro Stabilises at $1.1750 as ECB Pauses on Rates Cut# Naira Reclaims Value as External Reserves Climb to $38.5bn
