According to several economists, the European Central Bank has concluded its cycle of interest rate cuts. In its upcoming forecasts, the ECB is expected to confirm that inflation will remain at the target level over the medium term. Respondents anticipate that the deposit rate will stay at 2% at least through the end of next year.

Such assessments reinforce the prevailing view that the ECB has successfully managed the initial surge in inflation caused by the energy crisis and supply chain disruptions. Despite ongoing geopolitical risks and market volatility, economic models point to a sustained slowdown in price growth, providing the central bank with room to take a wait-and-see approach.

Keeping the deposit rate at 2% reflects the ECB's goal to balance economic stimulus with price stability. Cutting rates too aggressively could trigger another inflationary spike—especially given new trade tariffs—while keeping rates too high risks stifling economic activity.

Nevertheless, this policy is not without risks. Prolonged maintenance of rates at current levels could put pressure on businesses, particularly those heavily reliant on borrowing. Given the recent data on GDP growth, the possibility of external shocks remains, which could disrupt the fragile equilibrium and force the ECB to reconsider its strategy.

In recent weeks, European policymakers have become more confident that lowering borrowing costs by a total of eight quarter-points is sufficient to keep inflation near 2%. Survey results align with the consensus among analysts and investors, who now largely discount further monetary easing this year.

As noted above, the main reason the ECB is not rushing into another rate cut is the uncertain response to US tariffs. Core inflation has not yet slowed as much as the Governing Council would like, and the latest agreement between the EU and the US has brought little relief. As a result, the effects of tariffs are likely to become more evident in the coming months.

While tariffs on goods destined for the US will undoubtedly dampen demand, the very existence of a trade deal has reduced uncertainty and may even prompt companies to resume investment. Increased defense spending in Europe, political turbulence, and evolving geopolitical dynamics may also alter the eurozone's economic trajectory.

Economists surveyed expect the ECB to hold steady for now. Whether this is a net positive for the euro remains unclear, but for the moment, the anticipated pause is supporting demand for the single currency.

Technical outlook for EUR/USD:

Currently, buyers need to focus on taking out the 1.1680 level and only then will a test of 1.1715 become viable. From there, a climb to 1.1740 is conceivable, though this would be challenging without support from major market players. The more distant target is the 1.1790 high. On declines, significant buying interest is expected only around 1.1645. Failing that, it may be preferable to wait for a fresh low at 1.1610, or to consider long positions from 1.1575.

Technical outlook for GBP/USD:

Pound buyers need to clear the nearest resistance at 1.3445. This would open a path to the 1.3485 level, above which a breakout will likely be difficult. The furthest target stands at 1.3515. On the downside, bears will try to retake control at 1.3415. If successful, breaking this range would deal a significant blow to the bulls and push GBP/USD down to 1.3380, with the prospect of a move toward 1.3340.