EUR/USD Outlook - ECB Rate Cuts Signal Euro’s Struggle Amid Economic Challenges

The European Central Bank (ECB) has made a significant move, cutting its key interest rates by 25 basis points as widely expected. The deposit facility rate now stands at 3%, reflecting a broader strategy to stimulate economic growth amid slowing GDP and easing inflation. This marks the second consecutive 50 basis points reduction over two months, signalling a clear trajectory toward further monetary easing.

The focus now shifts to how these adjustments will shape the euro's trajectory against major currencies like the USD, JPY, and CHF. With GDP figures expected soon, the ECB aims to bolster economic activity through lower rates. However, this comes with trade-offs, as reduced rates also signal challenges in achieving sustainable growth.

The euro may experience short-term bullishness in December due to seasonal retail and services spending during the holiday period, potentially driving slight inflationary pressures. However, I anticipate a bearish trend for the euro in 2025, possibly nearing parity against the dollar.

As markets adjust to the ECB’s policies, traders should seize opportunities in this transitional phase. For those seeking more insights, join our upcoming webinars next week to delve deeper into market dynamics.

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