Dollar to perform strongly against euro if ECB opts for cautious stance on interest rates

(MENAFN) The dollar is expected to perform strongly against the euro on Thursday if the European Central bank opts for a cautious stance on interest rates, following the Federal Reserve's decision to keep rates unchanged the day before. Market expectations are leaning towards a 25 basis point cut in the ECB’s interest rates, bringing them down to 2.75 percent later on Thursday.

Analysts at ANZ noted that the economic and political challenges facing the largest economies in the eurozone are intensifying the pressure on the European Central Bank to take action to stimulate growth. These challenges are likely contributing to the ECB’s cautious approach regarding future rate adjustments.

The exchange rate of the euro stabilized at USD1.0425, after briefly dipping to USD1.0380 earlier. This indicates some level of resistance against further declines, despite the underlying pressure on the euro.

Meanwhile, the dollar saw a slight decrease against the yen, reaching 155.01 yen, and it also weakened slightly against a basket of other currencies, dropping to 107.880. Federal Reserve Chairman Jerome Powell remarked that significant progress had been made, with prices remaining "materially" above the breakeven point, suggesting there is still room for further rate cuts.

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