Selling EURUSD amid ECB’s dovish policies

Last week, the European Central Bank (ECB) kept interest rates unchanged after eight cuts of 25 basis points each throughout the year. The regulator’s officials expect inflation to consolidate near the 2% target and the economy to gain momentum in the coming quarters. ECB President Christine Lagarde said the central bank has achieved its goal of curbing consumer prices, but uncertainty over future prospects remains, despite a trade agreement with the United States. Some policymakers believe there is no need for further easing unless a major shock occurs. Others, however, argued that more serious measures should not be ruled out.

According to Yannis Stournaras, a Governing Council member known for his dovish rhetoric, future rate cuts would require significant changes in price and GDP forecasts. He stated that officials are highly data-dependent. If upcoming economic reports show that something has changed, relevant actions will be taken, Stournaras said. His point of view does not contradict recent comments from more hawkish colleagues. Madis Muller from Estonia considers the ECB’s approach to be moderately dovish, with no need for further cuts.

However, François Villeroy de Galhau from France has a different point of view, highlighting the risks of inflation dropping below the ECB’s target. As of September, consumer prices are projected to be about 1.9% in 2027.

Thus, the European currency is under pressure. The same cannot be said for the dollar, as the Fed’s rhetoric remains moderately hawkish, despite strong market expectations of significant easing. As a result, the EURUSD pair is likely to continue weakening in the short and medium term.

The overall recommendation is to sell EURUSD. Profits should be taken at the level of 1.16300. Stop Loss could be set at 1.18500.

The volume of the open position should be calculated so that the potential loss (protected by a Stop Loss order) does not exceed 1% of your deposit. If your account balance does not allow opening a position of this size, it is better to avoid entering the market on this signal and wait for other trade options that meet low-risk criteria.