EURUSD is looking neutral on Friday. The current quote is 1.0650. Investors are slowly tidying up the remnants of their nervous system. Exchange volatility is decreasing, which is good news. The European Central Bank meeting the day before ended as expected. The interest rate was raised by 50 basis points, as forecasted, to 3.5% per annum. Regarding future rate decisions, the ECB said it would make them based on inflation data and other economic indicators.
The regulator revised down its inflation forecasts. For 2023, expectations were lowered to 5.3% from 6.3% previously, while in 2024 they were raised to 3.4% from 2.9% previously. The baseline GDP forecasts for the current year have been improved to 1.0% from 0.5% previously on the back of lower energy prices and an improved degree of economic resilience. At the same time, expectations for 2024 were lowered to 1.6% from 1.9% previously, for 2025 to 1.6% from 1.8% previously.
All in all, the ECB did not do anything that was not expected of it. It will continue to aim for 2% inflation as before and will be prepared to adjust all available instruments to ensure price stability. There was no talk of halting the rate hike trend. This supported the EUR's position. Market emotions are fading, which deprives the USD of unconditional support as a safe-haven asset and allows the EUR to return to equilibrium.
