- The Euro dives to fresh lows below 1.1580 ahead of the ECB’s monetary policy decision.
- A Sino-US trade deal has failed to lift investors’ sentiment on Thursday.
- The ECB is expected to leave interest rates on hold for the third consecutive meeting.
EUR/USD is coming under growing bearish pressure heading into the outcome of the European Central Bank’s (ECB) monetary policy decision on Thursday. A feeble recovery attempt has been capped at the 1.1635 area before retracing previous gains and hitting fresh two-week lows below 1.1580 at the time of writing, despite the upbeat Eurozone data seen earlier on the day.
Eurozone’s preliminary GDP data revealed that the economy accelerated to 0.2% in the third quarter, beating expectations of a 0.1% growth. Apart from that, the economic sentiment has improved beyond expectations, with confidence in the industrial and services sectors’ activity also improving.
Earlier on the day, US President Donald Trump affirmed on Thursday that he had an “amazing” meeting with Chinese President Xi Jinping. The US will reduce tariffs on Chinese imports while the Asian country will keep rare earths trade flowing, resume purchases of US soybeans, and stop the fentanyl trade.
The reaction of Chinese President Xi has been more laconic, but he acknowledged a consensus on “important economic and trade issues”. Investors have welcomed the news, but the market reaction has been moderate.
On Wednesday, the Federal Reserve cut interest rates by 25 basis points (bps) as widely expected, but Chairman Jerome Powell shocked markets, putting into question another cut in December. The US Dollar surged across the board following Powell’s press conference.
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