The ECB is nearing the end of its interest rate cuts, and the euro is expected to continue to rise against the US dollar

Tradingkey - The European Central Bank cut interest rates by 25 basis points last week, the eighth rate cut since June last year. ECB President Christine Lagarde hinted that the rate cut cycle is approaching the end. The U.S. CPI in May showed that inflationary pressures eased month-on-month, and the market increased expectations of a rate cut by the Federal Reserve in September. The euro exchange rate has continued to strengthen, and the euro against the U.S. dollar is approaching its highest level since April. In the future, with the support of a weak dollar, the euro against the U.S. dollar will further strengthen and test the 1.1700 line.

The European Central Bank decided last week to cut the three key interest rates in the euro area by 25 basis points respectively. This is the eighth time the European Central Bank has cut interest rates since it started cutting interest rates in June last year. The European Central Bank said in a statement that the euro area's inflation rate is currently around the medium-term target of 2%. Although the inflation rate has fallen to a low of 1.9% in May, policymakers remain cautious.

Boris Vujcic, a member of the European Central Bank's board of directors, said that the central bank should wait until at least September to discuss interest rate actions in depth. As the European Central Bank cut its deposit rate from 4% to 2% within a year, President Christine Lagarde hinted that it was approaching the end of the rate-cutting cycle. Some officials even believed that the rate-cutting cycle was over.

The ECB's annual report pointed out that the US dollar accounted for 46% of the world's foreign exchange reserves in 2024, a slight decrease from the previous year. The report also said that the euro accounted for 19% of the overall comprehensive assessment of multiple indicators such as foreign exchange reserves, international trade settlements and global bond markets, the same as the previous year, making it the world's second largest currency.

Inflation pressure in the United States eased month-on-month. The latest data from the U.S. Bureau of Labor Statistics showed that CPI rose 0.1% month-on-month, lower than the 0.2% increase in April, but better than the 0.2% monthly increase expected by economists.

U.S. President Trump reiterated his view on Wednesday that the Federal Reserve should cut interest rates by 100 basis points, calling the latest inflation data "very good." Trump pointed out that the CPI just came out and it was excellent! The Fed should lower it by one percentage point. This will pay much less interest on maturing debts, which is so important! "He wrote on social media.

EUR/USD Technical Analysis

Source: Mitrade EUR/USD trend

Technically, the euro has been fluctuating against the dollar in recent days, forming a fluctuating upward channel, indicating that the unilateral upward trend has begun to become clear. In the KD indicator, the double lines are above the 50 position, and the double lines continue to move upward, indicating that the market bulls have the upper hand. In the future, the euro may continue to rise against the dollar, with the upper resistance at 1.1700.

The initial resistance for the euro against the dollar to rise is at 1.1650, the further resistance is at 1.1750, and the key resistance is at 1.1800; the initial support for the euro against the dollar to fall is at 1.1450, the further support is at 1.1350, and the more critical support is at 1.1250.