The EUR/USD currency pair's recent rally has stalled after failing to break above the 1.18 level for three consecutive sessions, according to Philip Wee of DBS Group Research [1]. This pause in momentum comes as the European Central Bank (ECB) pushes back against market expectations for a rate hike at its upcoming April 29 governing council meeting [1].
Wee notes that while the International Monetary Fund (IMF) has trimmed its 2026 Eurozone growth forecast to 1.1% from 1.3%, this figure still compares favourably to the ECB’s own staff projections [1]. Despite the recent setbacks, Wee argues that it is premature to call an end to the Euro’s recovery against the US Dollar, as well as the British Pound’s recovery [1].
In contrast to the ECB and the Bank of England (BOE), the US Federal Reserve is not pushing back against market expectations for rate hikes and is instead defending its decision not to provide strong forward guidance amid increased geopolitical uncertainties [1].
CONCLUSION
The EUR/USD rally has lost momentum due to the ECB's resistance to near-term rate hike expectations, despite relatively resilient growth forecasts. Market participants are advised that it may be too early to declare an end to the Euro’s recovery, as central bank stances and economic projections continue to evolve.