EUR/USD: ECB in focus this week – OCBC

Recent ECB-speaks remain dovish and continued to point to measured pace of rate cut with no hint of a larger magnitude of rate cut. EUR/USD was last seen trading at 1.0485, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Bullish momentum on daily chart intact

"Stournaras said the cuts should be in the order of 25bp each time so that by end-2025, rates is close to 2%, from the 3% that we are today. Klass said that he is comfortable with market bets for rate cuts at the next 2 meetings but not convinced yet that ECB needs to go into simulative mode."

"Villeroy said it is plausible for rates to be around 2% in summer. Lagarde said that the disinflation process continues, and policymakers do not see themselves as behind the curve. ECB will maintain its measured approach to ease monetary policy. Markets expect a 25bp cut at upcoming meeting (Thursday)."

"Bullish momentum on daily chart intact while RSI shows tentative signs of falling from near overbought conditions. Some pullback is not ruled out this week. Support at 1.0420/30 levels (23.6% fibo, 50 DMA), 1.0350 (21 DMA). Resistance at 1.0520, 1.0570 levels (38.2% fibo retracement of Sep high to Jan low)."