The European currency continues to withstand the pressure placed on it, thanks to the regulator's effective actions.
In an interview today, Governing Council member Joachim Nagel stated that he is satisfied with the parameters of the European Central Bank's monetary policy. "Our forecasts suggest that interest rates are currently at a good level," the Bundesbank president said on Monday in his speech in Seoul, repeating the standard position of ECB representatives in recent months. "The Eurosystem's monetary policy is currently broadly neutral."
Nagel's statement came amid growing concerns about slowing economic growth in the euro area. Some analysts argue that with current interest rates, the ECB risks suffocating the economy, especially in highly indebted countries. However, Nagel emphasized that the ECB's priority remains maintaining price stability, and the current monetary policy parameters are consistent with this objective.
As expected, this stance provoked a mixed reaction in the market. On the one hand, conservative investors welcome the ECB's commitment to fighting inflation. On the other hand, supporters of a looser monetary policy fear that it could lead to further slowing of economic growth and even a recession.
ECB leadership is now preparing for its final meeting of the year. Investors and economists broadly expect a fourth consecutive decision to leave interest rates unchanged. Most policymakers are satisfied with the current, broadly neutral, policy stance, as inflation fluctuates around 2% and the economy shows resilience to the increase in US tariffs.
However, behind the scenes of this apparent calm, debates about the future course are heating up. While inflation is under control, concerns persist about weak growth—particularly in the manufacturing sector. Some Governing Council members insist on closely monitoring signs of slowdown and being ready to ease policy next year. At the same time, the hawks warn against premature celebrations. They point to lingering risks such as rising energy prices and the potential impact of geopolitical conflicts, including trade tariffs, on inflation. For them, the priority remains maintaining strict control over price stability, even if this means a moderate slowdown in economic growth.
Some central bank officials are worried about the risks of declining economic activity and rising consumer prices, and new forecasts to be published in December may show that inflation in 2026 and 2027 will be below 2%, which could support calls for a rate cut in December or further easing next year. The forecasts "will include the initial projection for 2028," Nagel said. "Based on these projections, we will be able to determine to what extent we remain capable of achieving our medium-term inflation target."
Let me remind you that last week President Christine Lagarde said the ECB is in a good position because borrowing costs are currently at an optimal level.
As for the current technical picture of EUR/USD, buyers now need to think about how to capture the 1.1615 level. Only this will allow them to aim for a test of 1.1635. From there they can climb to 1.1655, though doing so without support from major players will be quite difficult. The furthest target is the 1.1675 high. If the trading instrument declines, I expect significant buyer activity only around 1.1585. If no one appears there, it would be wise to wait for a renewal of the 1.1560 low or open long positions from 1.1530.
Regarding the current technical picture of GBP/USD, pound buyers need to take the nearest resistance at 1.3240. Only this will allow them to aim for 1.3265, above which a breakout will be quite difficult. The furthest target is the 1.3300 level. If the pair falls, the bears will try to take control at 1.3210. If they succeed, a breakout of this range will deal a serious blow to the bulls and push GBP/USD toward the 1.3185 low with the prospect of reaching 1.3155.
