Euro to Dollar Rate Resilient Despite ECB Rate Cut, USD Confidence Depressed

April 17, 2025 - Written by David Woodsmith

STORY LINK Euro to Dollar Rate Resilient Despite ECB Rate Cut, USD Confidence Depressed

The Euro (EUR) dipped against the US Dollar (USD) in immediate reaction to the ECB policy decision, but there was resilience on dips and traded around 1.1365 from 1.1335 lows.

According to ING; “We retain a tactical target at 1.15 in EUR/USD, with risks of even larger gains.”

The bank does expect a EURUSD exchange rate retreat later in the second quarter.

Scotiabank commented; “EUR/USD continues to be bound between near-term support in the mid-1.12s and resistance in the mid-1.14s. Should EURUSD break the range to the upside, we see limited resistance ahead of the upper 1.16s.”

The ECB cut interest rates by 25 basis points at the latest policy meeting, in line with consensus forecasts, with the deposit rate cut to 2.25%.

The central bank expressed greater reservations surrounding the growth outlook; “The euro area economy has been building up some resilience against global shocks, but the outlook for growth has deteriorated owing to rising trade tensions.”

Bank President Lagarde stated that downside risks to the growth outlook had increased while also emphasising that there is a substantial element of uncertainty.


ING added; “While we cannot exclude the possibility that markets can take the opportunity of an ECB cut to take profit in crowded EUR longs, the news from the US is still hitting the dollar, and the highly liquid euro remains in a prime position to benefit from the rotation.”

As far as the US data is concerned, the Philadelphia Fed manufacturing survey dipped sharply to a 2-year low of -26.4 for April from 12.5 the previous month and well below expectations of 2.5 with a notable slide in the new orders reading to a 5-year low.

There was little change in net confidence over the outlook after a sharp decline last month, but prices are expected to increase at a faster rate. The prices received index jumped to the highest level since June 2021 amid elevated uncertainty.

Markets and central bankers are also all having to deal with a huge element of uncertainty.

In comments on Wednesday, Fed Chair Powell stated that the impact of tariffs was likely to be greater than expected with weaker growth and higher inflation.

Powell again declined to take short-term action and stated that the bank had plenty of time to wait and assess developments.

MUFG commented; “Powell stated that it was the Fed’s obligation to “make certain” that a one-time increase in prices did not turn into an “ongoing inflation problem”.


It added; “That to us does not sound like a central bank that will be rushing to cut rates and there remains an increasing risk that the Fed could delay for longer than the markets expect to cut rates.

A key element will be whether higher yields support the dollar or are a symptom of a loss of confidence in US assets.

According to Standard Chartered head of G10 FX research, Steve Englander; "We think the restoration of the higher UST yield = stronger USD equation would be a major sign of normalisation.”

He added; "We think the unwinding of growth pessimism, along with reduced prominence for tariff policy, could lead to renewed USD support."

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TAGS: Euro Dollar Forecasts