ECB Interest Rate Decision (ECB): The central bank cut interest rates by 25 basis points as expected!

The European Central Bank (ECB) has announced its latest interest rate decision, revealing a 25-basis-point reduction in interest rates to 2%, down from its previous level of 2.25%. The decision follows a cooling in inflation to 1.9% YoY in May, falling below the ECB’s target 2% level for just the second time since 2021. 

Of note, the ECB lowered its 2026 inflation forecast significantly to 1.6% which puts inflation in danger of undershooting the ECB’s 2% goal next yearl. This could mean more rate cuts.  Meanwhile, the economic outlook remains uncertain owing to Trump’s trade tariffs. The ECB lowered its growth outlook for next year to 1.1% but stated that a further escalation of trade tensions would mean weaker growth and inflation. 

The market’s reaction to the decision has been relatively tame. Attention will turn to ECB President Christine Lagarde’s press conference.

EURO VS DOLLAR (EUR/USD):

If we take a closer look at the technicals, we can observe how price was trading just below 1.1435 before the news release, and post the release we have seen price rise to 1.1447. On the 4-hour chart, the price trades in a rising channel heading towards resistance at 1.1450. Above here, 1.15 comes into focus.

EURO STOXX 50 (EUR50):

The EURO STOXX 50 has seen little volatility from this ECB interest rate decision. Before the announcement, the price was trading at 5116. The price remains unchanged following the announcement. On the 4-hour chart, the price has recovered from the rising trendline support and has pushed over the 100 SMA. A rise above 5465 is needed to break out. 

Trade EUR50