The EUR/USD exchange rate depreciated to approximately 1.1340 following the European Central Bank’s (ECB) decision to lower key interest rates by 25 basis points, aligning with market expectations. The ECB’s policy statement acknowledged progress in disinflation but refrained from providing forward guidance on future rate adjustments, citing prevailing economic uncertainties, including those related to international trade policies. The reduction lowered the Deposit Facility Rate to 2.25% and the Main Refinancing Operations Rate to 2.4%. This marks the sixth consecutive rate cut and the seventh since the easing cycle commenced in June. Market expectations for further easing are underpinned by projections indicating a return to the ECB’s 2% inflation target by year-end and concerns regarding potential economic shocks within the Eurozone. The ECB emphasized a data-dependent, meeting-by-meeting approach to future policy decisions in light of the aforementioned uncertainties.
