Thu Sep 12 09:51:00 UTC 2024: ## Euro Rebounds as ECB Cuts Rates and Dollar Weakens

**Frankfurt, Germany:** The Euro surged against the US Dollar on Thursday, recouping losses from earlier in the week, as the European Central Bank (ECB) cut interest rates and the US Dollar weakened on softer-than-expected inflation data.

The ECB lowered its deposit facility rate by 25 basis points to 3.5%, as widely anticipated, and also reduced its main refinancing rate by 60 basis points to 3.65%. This marks the second interest rate cut in the ECB’s current easing cycle, initiated in June after the bank gained confidence that inflation in the Eurozone will return to its target of 2% by 2025.

The Eurozone’s central bank’s decision to cut rates was driven by a sharp decline in price pressures and growing concerns about Germany’s economic growth. The German economy contracted by 0.1% in the second quarter and is facing a recession due to weak demand.

Meanwhile, the US Dollar weakened after the US Producer Price Index (PPI) data for August showed a slower-than-expected increase in producer inflation, suggesting potential cooling in price pressures. This further fueled the Euro’s gains.

Despite the rate cut, ECB President Christine Lagarde maintained a data-dependent approach and refrained from providing specific future rate guidance. She stated that future decisions would be based on the ECB’s assessment of inflation and economic data, underlying inflation dynamics, and the strength of monetary policy transmission.

The EUR/USD pair, which had dipped to a three-week low around 1.1000 earlier in the session, recovered strongly and traded near the 1.1060-1.1065 level following the ECB’s decision and the US inflation data.

However, the pair remains near a make-or-break point at 1.1000, with the 20-day Exponential Moving Average (EMA) near 1.1047 acting as a key resistance level. The 14-day Relative Strength Index (RSI) is below 50.00, suggesting near-term uncertainty.

The Euro’s future trajectory will likely depend on the ECB’s future monetary policy decisions, developments in the Eurozone economy, and the trajectory of US inflation.

**Disclaimer:** This news article is for informational purposes only and should not be considered investment advice. Investors should conduct their own thorough research before making any investment decisions.

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