EUR/USD. Price Analysis. Forecast. The ECB Keeps Interest Rates Unchanged

Ben Graham · February 5

At the time of publication on Thursday, the EUR/USD pair fluctuated just below the round level of 1.1800 as investors assessed the outcomes of the European Central Bank meeting and conflicting economic indicators from the US. After the February monetary policy meeting, the ECB confirmed that it would maintain key interest rates in line with market expectations: the refinancing rate is 2.15%, the marginal lending rate is 2.4%, and the deposit rate is 2%. In its statement, the ECB highlighted the resilience of the Eurozone economy amid a challenging global environment, bolstered by low unemployment levels, a stable private sector balance, increased government spending on defense and infrastructure, and the effects of previous rate cuts, while noting the ongoing uncertainty due to geopolitical and trade risks.

ECB President Christine Lagarde, at the press conference, outlined balanced risks for growth and inflation, reaffirming the commitment to return inflation to the 2% target in the medium term. She emphasized that future actions will depend solely on data and will be made at each meeting, without pre-committing to a specific path for changing interest rates.

In the US, fresh data provided mixed signals: the ISM Purchasing Managers' Index (PMI) for January showed a confident increase in activity, but a weakening employment component heightened concerns about the labor market. These worries were reinforced by the ADP report showing weak private-sector job growth, and on Thursday, the US Labor Department reported an increase in initial jobless claims to 231,000 from 209,000 the previous week, along with an increase in continuing claims.

Additionally, the JOLTS survey reflected a decrease in job openings in December to 6.542 million from a revised 6.928 million in November, significantly below the consensus of 7.2 million. In this context, EUR/USD traders are avoiding aggressive directional bets: the lack of surprises and the neutral ECB decision, along with ambiguous US data, keep the pair in consolidation but with some downward pressure.

From a technical perspective, the pair is under pressure, barely holding the 1.7800 level. If prices drop below the 20-day SMA, bulls will lose control of the situation. Breaking through the 1.1800 level and rising above the 9-day EMA will allow bulls to regain strength. However, as oscillators on the daily chart are positive, bulls continue to fight.

The table below shows the percentage changes in the euro against key currencies for the day, with the euro demonstrating the greatest resilience against the British pound.