The ECB is expected to cut its policy rate 25bps to 3.00% this morning. No surprise—a 1/4-point ease is fully priced in, Scotiabank’s Chief FX Strategist Shaun Osborne notes.

EUR chops around 1.05

“Swaps reflect the market’s anticipation that rates have a lot further to fall in the Eurozone—around 125bps of additional cuts are reflected in the curve over the next 12 months or so. That might be a bit too much but it seems unlikely that President Lagarde will shift to a more cautious policy bias at this point.”

“ECB monetary policy may run a fair bit softer relative to its peers in 2025, setting the EUR up to underperform in the medium term.”

“The EUR is little changed on the session. Spot remains within its recent range but has lost ground on the week and a net decline through Friday will emphasize the negative technical impact of last week’s failure to hold gains above 1.06. Short-term support sits at 1.0460/80, ahead of a drop to 1.0400/20. Resistance is 1.0540/50.”