EUR/USD currency pair faced a downturn as a prominent European Central Bank (ECB) official hinted at the possibility of implementing two rate cuts before the summer break. Yannis Stournaras, the head of the Greek central bank, advocated for these rate cuts, emphasizing the urgency to stimulate economic growth amidst the European economy’s stagnation.

ECB Member Favors Multiple Rate Cuts Ahead of the Summer

In a recent interview, Yannis Stournaras expressed concerns regarding the sluggishness of the European economy, particularly since the fourth quarter of 2024. He highlighted that approximately 30% of past tightening measures are yet to manifest in the real economy. Stournaras stressed the necessity to act swiftly in adjusting interest rates, citing the need to stay in tandem with the Federal Reserve’s policies.

Immediate Market Reaction

The impact of Stournaras’ statements was promptly reflected in the currency markets, with the EUR/USD pair experiencing a downward trajectory. However, the pair managed to stabilize shortly after the news dissemination.

EUR/USD Flirts With Familiar Zone of Resistance

Analyzing the weekly chart of EUR/USD, it’s evident that the pair is encountering resistance around the 1.0930/1.0940 zone, a level that has historically triggered downward movements in 2023. This week’s economic calendar is relatively light, indicating a possible continuation of consolidation around current levels. Notable US data releases, including the Producer Price Index (PPI) and retail sales, may influence volatility, along with the University of Michigan consumer sentiment survey later in the week.

The daily chart provides further insights into the resistance zone, marked by two Fibonacci retracements representing significant declines in 2020 to 2022 and 2023. Despite trading above the 50 and 200-day simple moving averages (SMAs), indicating a bullish sentiment, price momentum appears to be slowing down. The 50 SMA is declining towards the 200 SMA, suggesting a potential reversal. To sustain bullish momentum, a break above 1.0960 is essential, with further targets set at 1.1017.

The EUR/USD currency pair remains sensitive to economic data releases and central bank announcements, with investors closely monitoring developments for potential trading opportunities.