No Reaction to ECB Cut as Markets Drift in Pre-Holiday Lull

Action Insight Mid-Day Report 4-17-25

No Reaction to ECB Cut as Markets Drift in Pre-Holiday Lull

Trading in the forex markets remain calm, with little reaction to ECB’s widely anticipated 25bps rate cut. The move to lower its deposit rate to 2.25% was fully priced in. The central bank acknowledged that Eurozone growth prospects have deteriorated due to escalating global trade tensions, but this has long been embedded in market expectations. The absence of any forward guidance or new policy direction helped reinforce the market’s muted tone.

Indeed, the primary focus for investors remains the intensifying US trade war and its ripple effects on global economic sentiment. As markets break for the Easter weekend, investors are bracing for trade policy to return to center stage next week. The lack of clarity surrounding tariff policy and broader US trade strategy is increasingly weighing on corporate confidence. U.S. firms, in particular, are becoming more hesitant to invest or expand amid the shifting policy environment.

A Reuters poll conducted between April 14–17 illustrates the rising unease. The probability of a US recession within the next 12 months surged to 45%, up sharply from 25% in March and marking the highest reading since December 2023. All 45 economists who responded to a related question said that tariffs have negatively affected business sentiment, with nearly half describing the impact as “very negative.”

At the same time, economists are scaling up their inflation forecasts. Expectations for headline CPI, core CPI, PCE, and core PCE have all been revised higher, with all measures now projected to remain above Fed’s 2% target through at least 2027. A majority of economists—62 out of 101 surveyed—expect the Fed to hold its benchmark interest rate steady at 4.25%-4.50% until at least July. ....

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EUR/USD Mid-Day Outlook

Daily Pivots: (S1) 1.1314; (P) 1.1363; (R1) 1.1449; More...

EUR/USD is still bounded in consolidation below 1.1472 and intraday bias remains neutral. Deeper retreat cannot be ruled out. But downside should be contained by 1.1145 resistance turned support to bring another rally. On the upside, break of 1.1472 will target 161.8% projection of 1.0358 to 1.0953 from 1.0731 at 1.1694.

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EURUSD | USDJPY | GBPUSD | USDCHF | AUDUSD | USDCAD

EURJPY | EURGBP | EURCHF | EURAUD | GBPJPY

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Economic Calendar
GMT Ccy Events Actual Forecast Previous Revised
22:45 NZD CPI Q/Q Q1 0.90% 0.70% 0.50%
22:45 NZD CPI Y/Y Q1 2.50% 2.30% 2.20%
23:50 JPY Trade Balance (JPY) Mar -0.23T -0.25T 0.18T 0.19T
01:30 AUD Employment Change Mar 32.2K 41.2K -52.8K -57.5K
01:30 AUD Unemployment Rate Mar 4.10% 4.20% 4.10% 4.00%
06:00 CHF Trade Balance (CHF) Mar 6.35B 5.22B 4.80B 4.74B
06:00 EUR Germany PPI M/M Mar -0.70% -0.10% -0.20%
06:00 EUR Germany PPI Y/Y Mar -0.20% 0.40% 0.70%
12:15 EUR ECB Main Refinancing Rate 2.40% 2.40% 2.65%
12:15 EUR ECB Deposit Rate 2.25% 2.25% 2.50%
12:30 USD Initial Jobless Claims (Apr 11) 215K 224K 223K
12:30 USD Building Permits Mar 1.48M 1.45M 1.46M
12:30 USD Housing Starts Mar 1.32M 1.42M 1.50M
12:30 USD Philadelphia Fed Manufacturing Apr -26.4 6.8 12.5
12:45 EUR ECB Press Conference
14:30 USD Natural Gas Storage 24B 57B