EURUSD is compelled to retreat. Overview for 26.01.2024

The primary currency pair is in decline on Friday. The current EURUSD quote stands at 1.0842.

At its meeting in January, the European Central Bank maintained the current monetary policy structure unchanged. The interest rate remained at 4.5% per annum, a historical maximum.

In its comments, the ECB explained that the rate is at a defensive level, allowing for a slowdown in the pace of inflation growth in the future. Regarding the PEPP refinancing program, the ECB intends to continue working with it and fully reinvest the funds received from securities. The plan for the year's second half involves reducing the ECB portfolio by 7.5 billion euros. The program will cease entirely by the end of 2024.

According to the initial estimate, the US GDP in Q4 2023 increased by 3.3%, surpassing the growth forecast of 2.0%. This indicates that the US economy is faring better than the European one – that is, the Federal Reserve can afford to cut the interest rate.