EUR/USD steadies as ECB keeps rates unchanged, Lagarde presser eyed

• EUR/USD steadies after slipping to a two-week low as the ECB keeps rates unchanged.
• ECB maintains its data-dependent stance, saying policy will be set on a meeting-by-meeting basis with no pre-commitment to a rate path.
• Policymakers flag risks from trade tensions and geopolitical uncertainty, keeping the outlook cautious.

The Euro (EUR) shows limited reaction to the European Central Bank’s (ECB) monetary policy decision on Thursday, with EUR/USD struggling to stage a meaningful recovery after recent losses. At the time of writing, the pair trades around 1.1570, attempting to rebound after slipping to its lowest level in two weeks earlier in the day.

The ECB left all three key policy rates unchanged, with the Deposit Facility, Main Refinancing and Marginal Lending Rates holding steady at 2.00%, 2.15%, and 2.40%, respectively. The Governing Council said that inflation remains close to its 2% medium-term target and that its assessment of the inflation outlook is broadly unchanged.

The ECB noted that the Eurozone economy has continued to grow despite a challenging global backdrop, supported by a robust labour market and the lagged effects of previous rate cuts. However, policymakers acknowledged that the outlook remains uncertain, citing ongoing global trade disputes and geopolitical tensions as key risks.

In its statement, the ECB reaffirmed its data-dependent, meeting-by-meeting approach, stressing that it is not pre-committing to a particular rate path and will adjust policy in line with incoming data and inflation dynamics. Traders now look forward to ECB President Christine Lagarde’s press conference for further policy guidance and economic assessment.

On the other hand, the US Dollar (USD) remains broadly supported following the Federal Reserve’s (Fed) 25-basis-point (bps) interest rate cut on Wednesday and Chair Jerome Powell’s cautious remarks that left the outlook for further easing murky. Powell said that “a further reduction in the policy rate at the December meeting is not a foregone conclusion,” dampening expectations of another cut and lifting the Greenback across major pairs.

The US Dollar Index (DXY), which tracks the Greenback’s value against a basket of six major currencies, trades near 99.55, easing slightly after hitting its highest level since August 1, supported further by renewed optimism surrounding the Trump-Xi trade truce announced earlier on Thursday.