Action Insight Mid-Day Report 1-30-25

Euro Gains Modestly After ECB Cut, Dollar Soft on GDP Miss

Euro is trading slightly higher following the ECB's widely expected 25bps rate cut, though the move lacks strong momentum. In her post-meeting press conference, President Christine Lagarde reinforced the bank’s "gradual easing path".

She stated that a larger 50bps cut was not even considered today, making it clear that an aggressive rate-cutting cycle is off the table for now.

At the same time, Lagarde also emphasized that rates remain in "restrictive territory," and ECB has not yet discussed ending its easing cycle, confirming that further rate cuts remain the way to go.

Meanwhile, Dollar is under mild pressure after weaker-than-expected Q4 GDP data weighed on sentiment. The greenback slipped alongside US Treasury yields, with the 10-year yield briefly falling below 4.5% mark before recovering. Despite this, Dollar's decline has been relatively contained outside of USD/JPY, where the Yen is benefiting from falling yields. There is little indication of a sustained Dollar decline at this stage....

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EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.0387; (P) 1.0415; (R1) 1.0449; More...

EUR/USD recovers slightly but stays in range below 1.0531. Intraday bias remains neutral for the moment. Outlook is unchanged for now. On the downside, break of 1.0371 support will indicate rejection by 38.2% retracement of 1.1213 to 1.0176 at 1.0572 and retain near term bearishness. Retest of 1.0176 low should be seen next. On the upside, though, decisive break of 1.0572 will raise the chance of bullish reversal, and target 61.8% retracement at 1.0817.

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EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY