EBC Markets Briefing | Euro barely moves with Oct rate cut priced in

The euro was flat on Monday after las week ECB chief Christine Lagarde and other policymakers hint about a rate cut at the meeting this month.

The ECB has already lowered rates twice this year and the Oct rate cut is almost fully priced in by financial markets, given a weak economy and an unexpectedly quick slowdown in price growth.

Inflation in the common currency bloc, which declined to 1.8% last month, will pick up a little and be at the ECB's 2% target next quarter and stay around there until at least 2027, a Reuters poll found.

The central bank does not give a neutral rate estimate, but staff published a paper this year showing a real rate of around zero - or about 2% in nominal terms - when adjusted for inflation.

Germany’s economy is likely to shrink for consecutive years in 2024, according to government forecasts, in what would be the longest slump in more than two decades.

Consumer demand remains depressed and companies are holding back on investments as concerns about an expansion of conflict in the Middle East and China’s growing competitive threat eat away at business confidence.

The euro has seen a quick retreat this month, falling below the neckline around 1.1000. The double top pattern suggests the risk may be skewed towards the downside with potential support at 1.0880.

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