EUR: ECB holds rates steady for fourth meeting – OCBC

The European Central Bank (ECB) kept policy rates unchanged, reinforcing its flexible, data-dependent stance. While not committing to a hike, President Lagarde emphasized that all options remain on the table, supporting expectations that the easing cycle may have ended. EUR/USD remains supported, with technicals favoring buy-on-dips despite a corrective pullback risk. Pair was last seen at 1.1713 levels, OCBC's FX analysts Frances Cheung and Christopher Wong note.

Lagarde leaves all policy options open amid improved growth outlook

"The ECB left policy rates unchanged, as widely expected, marking the 4th consecutive meeting on hold. Lagarde reiterated that the Governing Council remains in a 'good place' on rates, but emphasized that policy is 'not static', reinforcing a stance of flexibility rather than pre-commitment. This framing was consistent with the ECB’s continued desire to stay data-dependent amid still-uncertain inflation dynamics."

"At the press conference, Lagarde addressed market speculation that the ECB’s next policy move could be a rate hike rather than a cut, stressed that there was unanimity within the Governing Council that 'all optionalities should remain on the table', underscoring the absence of a pre-determined policy path. While not explicitly endorsing a hiking bias, the refusal to rule it out was nonetheless perceived as mildly hawkish."

"Taken together, the combination of improved growth and higher CPI projections, alongside expectation that ECB has likely ended easing cycle are factors supportive of EUR. Mild bullish momentum on daily chart intact though there are signs of it waning while RSI fell from overbought conditions. Corrective pullback lower is not ruled out but bias remains to buy on dips. Support at 1.1640 (100 DMA), 1.1610 levels (21, 50 DMAs). Resistance at 1.1760, 1.1820 levels."