Euro sheds weight as ECB cautions about risks to disinflation process.

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• Euro sheds weight as ECB cautions about risks to disinflation process.
• European inflation could take until 2025 to reach 2%.
• ECB wants wage growth to be much slower before moving on rates.

The Euro (EUR) fell against most of its major currency peers on Thursday as Euro investors rebalance their exposure. The European Central Bank (ECB) continues to caution that market expectations of rate cuts have run well ahead of what the ECB is willing to bring to the table.

Both the ECB and the Federal Reserve (Fed) have spent significant verbal effort in talking down market hopes for an accelerated pace of rate cuts. Policymakers on both sides of the Atlantic caution that movement on rate cuts will be both data-dependent and occur at a much slower pace than money markets are pricing in.

The Euro (EUR) is broadly lower on Thursday, declining around a fifth of a percent against the US Dollar (USD), Canadian Dollar (CAD), and the Japanese Yen (JPY). The Swiss Franc (CHF) represents the only gain for the Euro, up around a quarter of a percent on the day as the two European currencies compete for last place.

The EUR/USD waffled below the 1.0900 handle this week, and the pair remains unable to find its footing for a bullish recovery. Intraday action ran into the handle early Thursday before getting rejected back into near-term lows near 1.0850.

The Euro continues to get snagged on congestion against the US Dollar on the daily candlesticks. The EUR/USD is trapped in a congestion zone between the 50-day and 200-day Simple Moving Averages (SMA) at 1.0900 and 1.0850, respectively.

The pair remains up 4% from last October’s swing low into 1.0450, and the technical floor is parked near 1.0750 at December’s bottom bids.

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