 Euro continues to trade on the softer side in an otherwise directionless market. Yet it's holding above its low against Dollar, lacking sufficient momentum for a decisive breakout. Market participants and ECB policymakers are grappling with critical questions regarding the pace at which interest rates should be reduced towards neutral, and whether the terminal rate in this easing cycle might dip below that neutral point. These deliberations are complicated by differing views within the ECB. On one side, dovish members are voicing concerns about the risks of inflation undershooting, advocating for a more aggressive easing to prevent economic downturn. Conversely, hawkish policymakers are downplaying these risks, cautioning against premature easing that could reignite inflationary pressures. Ultimately, barring any significant external shocks such as geopolitical escalations, the path of inflation will hinge on the duration and depth of the economic slowdown in the Eurozone. In this context, the upcoming release of the Eurozone PMI data tomorrow is highly anticipated, as it may provide clearer insights into economic activity, and could potentially catalyze more pronounced movements in Euro.... |
