Euro Stabilizes After ECB Decision, Next Direction Determined by Data
The euro remained stable around $1.18 after the European Central Bank (ECB) on Thursday (February 5th) held its three key interest rates, as expected. According to the latest data, EUR/USD hovered around 1.1807, with a nearly flat daily movement (+0.02%).
In its official statement, the ECB emphasized that its primary focus remains the same: inflation must stabilize around the 2% target over the medium term, and policy will remain data-dependent and decided meeting-by-meeting.
What caused the euro to "fidget," but also not fall sharply, was a combination of two factors: the ECB stated that the regional economy remains relatively resilient amidst a challenging global environment, but acknowledged that uncertainties (trade and geopolitical risks) could restrain demand.
At the same time, the latest inflation figures gave the market reason to consider room for further easing: Eurozone headline inflation fell to 1.7% year-on-year in January, while core inflation weakened to 2.2%. This combination makes the market sensitive to any signals from Lagarde regarding the next direction in interest rates.
The bottom line: the euro is currently holding its breath around $1.18—the ECB hasn't signaled any immediate changes, but cooling inflation is keeping the market listening. The next direction will likely be determined by the tone of the ECB's press conference and how the market interprets the timing of any further easing (if it does).
Source: Newsmaker.id
