FX.co ★ Euro Holds Steady Ahead of ECB Rate Cut

The euro remained just below the $1.14 threshold as market participants anticipated the European Central Bank's policy announcement scheduled for Thursday. A reduction of 25 basis points in the interest rate is largely anticipated, following a decrease in Eurozone inflation to 1.9% year-on-year in May. This figure falls short of both the predicted 2.0% and the ECB’s target, marking a first since September 2024. The lower inflation rate has sparked anticipation of additional easing measures in the future, even amidst recent hawkish remarks from certain policymakers suggesting a pause. Investor sentiment was further boosted by Germany's endorsement of a €46 billion tax relief initiative for the period 2025–2029, aimed at stimulating business activity and economic growth. On the trade front, EU Trade Commissioner Maroš Šefcovic characterized his discussion with US Trade Representative Jamieson Greer as “productive and constructive,” hinting at the possibility of the EU being exempted from President Trump’s decision to double tariffs on steel and aluminum imports to 50%.