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Mar 08 - 05:55 AM

EUR/USD - COMMENT-ECB Vs Fed Cut: What Difference Does A Week Make To EUR/USD?

By Rob Howard  —  Mar 08 - 04:20 AM

March 8 (Reuters) - EUR/USD may be neither shaken nor stirred if the European Central Bank and Federal Reserve start cutting interest rates within a week of each other in June.

The ECB laid the ground for a June 6 rate reduction on Thursday, shortly before relatively dovish comments from Fed Chair Jerome Powell suggested June 12 is more likely than not to mark the start of the Fed's rate reduction cycle.

A ray of hope for divergence seekers was provided by French central bank chief Francois Villeroy de Galhau on Friday, who said there will be an ECB rate cut in spring and that "spring is from April until June 21".
Fellow ECB policymaker Gediminas Simkus said an April cut cannot be ruled out but the probability is low.

The best chance of the Fed delaying its first rate cut beyond June is if U.S. inflation and jobs figures are hotter than expected over coming weeks.
Coupled with an ECB rate cut as early as April, this could depress EUR/USD towards 1.05.

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Source:
Refinitiv IFR Research/Market Commentary

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