Euro up as rates held

The Euro (EUR) kept a positive tone on Thursday, extending gains beyond the 1.0900 mark, boosted by US Dollar’s (USD) after the ECB released its decision to leave interest rates unchanged at 4.5%.

The bank warned that inflation is likely to pick in the coming months while the economic projections suggest that the region's economy will accelerate from a 0.6% average in 2023 to 0.8% in 2024 and 1.5% in 2025.

On Wednesday, the Fed surprised investors with an unexpectedly dovish tone. The bank kept interest rates unchanged, as expected, but Fed Chair Jerome Powell suggested that interest rates have peaked with 17 of the 19 policymakers projecting rate cuts in 2024.

Risk appetite surged after the decision and the US Dollar was sold across the board. The Euro rallied more than 100 pips higher to fresh two-week highs right above 1.0900, where the pair has steadied ahead of the European Central Bank’s (ECB) decision due later on Thursday.