4 min read The European Central Bank (ECB) has announced its latest interest rate decision, leaving rates unchanged at 2% at the April meeting. This marked the seventh straight meeting where rates were left unchanged. The decision comes as inflation rose to 3% in April and as uncertainty mounts amid the Middle East conflict.
The ECB reiterated that the Iran war increases uncertainty, raising inflation risks and dampening the growth outlook. The central bank warned that the duration of the war will intensify upside inflation risk and downside growth risk.
However, the ECB offered no guidance on future steps, repeating its mantra of a data-dependent, meeting-by-meeting approach. Attention will now turn to ECB President Christine Lagarde’s speech, where she will likely repeat that officials are ready to act when needed.
The market is pricing three rate hikes this year, in line with before the meeting and up from two hikes ahead of the March meeting.
EURO VS DOLLAR (EUR/USD):
If we take a closer look at the technicals, we can see that the price traded +0.3% at 1.1715 before the rate decision, and after the decision, it has fallen to 1.17. However, a stronger US GDP could be the catalyst lifting the USD. On the four-hour chart, EUR/USD trades in a falling channel. Rejection at the 50 SMA reinforces the bearish trend.
EURO STOXX 50 (EUR50):
The EURO STOXX 50 rose further following the ECB rate decision. The index was trading +0.3% ahead of the announcement at 5825 and has since risen further to 5845. On the 4-hour chart, the price trades in a falling channel. However, the price has recovered from the 5730 low and is attempting to extend the recovery to break out to the upside.
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