It's been a tough short-term trade in the aftermath of the ECB rate cut.
The move was wholly expected and the market is comfortably fully pricing in another 25bps cut in January, with a decent chance of a 50 bps cut in March or sooner.
What may have weighed on the euro initially was a downgrade to growth forecasts to 1.1% in 2025 from 1.3%. An 'ECB sources' report also highlighted some skepticism among policymakers that's too high, especially with the risk of tariffs.
The euro has been choppy, in part because of broader US dollar volatility after a hotter PPI report weighed against a worrisome initial jobless claims report. The Fed is well on-track to cut rates next week but what happens in 2025 is highly debatable with 50-75 bps in easing priced in.
China is also a driving factor in all markets today as the Work Conference read-out offered little in terms of concrete action to boost growth or consumption.
