4 min readThe European Central Bank (ECB) has announced its latest interest rate decision, leaving rates unchanged at 2% in the first rate decision of 2026. The ECB last cut rates in June. The decision comes as the economy remains resilient against a challenging backdrop. However, the outlook is still uncertain owing to trade policy uncertainty and geopolititcal tensions
The ECB appears unfazed by inflation cooling to 1.7% YoY, further from the 2% target and by the rally in the EUR which rose to a 4 year high against the USD last month. Policymakers have described policy as beiing in a good place.
For now the market sees no changes to borrowing costs this year or next. The market is pricing in just a 25% chance of a rate reduction in 2026. Attention will now 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 see that the price traded around 1.18 before the rate decision, and after the decision it continues to consolidate around this level. On the 4-hour chart, the consolidation lends itself to a breakout trade. Sellers would need to take out 1.1780 to break to the downside and expose the 200 SMA at 1.1750. A break below here brings 1.170 into focus.Buyers would need to rise above 1.1830, the February high, to break out to the upside. A rise above here creates a higher high and exposes the 50 SMA AT 1.1880.
EURO STOXX 50 (EUR50):
The EURO STOXX 50 was unchanged immediately following the ECB meeting. However a deepening selloff in US futures appears to be weighing on the price heading towards ECB President Lagarde’s press conference. Before the announcement, the price was trading 0.34% at 5705. Following the announcement the EURO STOXX 50 trades 0.52% at 5713 On the 4-hour chart, the price trades within a triangle pattern, recovering from the 200 SMA and rising trendline at 5670. Buyers will look to rise above 5720 the falling trendline to extend gains towards 5760.
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