The European Central Bank (ECB), led by President Christine Lagarde, has held its key interest rates steady, despite a sustained high inflation outlook. This decision comes in the wake of a notable drop in inflation in September, attributed to strong base effects. The ECB emphasized that previous rate hikes are still significantly influencing financing conditions, thereby suppressing demand and reducing inflation.
According to the DailyFX Calendar, markets had anticipated this decision by the ECB, with prospective rate cuts expected between the first and second quarters of 2024. The bank's stance on interest rates is seen as a response to the recent inflation trends, which reflect the impact of earlier rate hikes.
In currency markets, TradingView charts have shown a downward trajectory for the EUR/USD pair towards the 1.0516 and 1.0500 levels. This trend is driven by a robust US dollar and upcoming US data. IG Retail data indicates that 68.74% of traders are holding a net-long position, maintaining a long-to-short ratio of 2.20 to 1.
The bearish data on the EUR/USD pair suggests further potential for depreciation. This perspective aligns with insights, indicating that the euro could face additional downward pressure in the near future due to these market conditions.
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