Euro slides on dovish ECB comments

The euro stumbled on Monday, in the wake of some dovish comments from a European Central Bank (ECB) policymaker.

Meanwhile, the pound is struggling so far this morning, with GBP/EUR muted €1.1730 and GBP/USD dipping to $1.2688. GBP/CAD has slipped to CA$1.7015, while GBP/AUD and GBP/NZD retreat to AU$1.9186 and NZ$2.0651, respectively.

Coming up, will another contraction in Eurozone GDP extend the euro’s losses today?

What’s been happening?

The euro got off to a poor start this week, following comments from European Central Bank policymaker Mario Centeno.

Centeno suggested that the bank ‘should start cutting rates sooner rather than later’ amid a ‘sustained’ fall in inflation.

The US dollar, meanwhile, trended higher on Monday as a cautious market mood saw investors favour the safe-haven currency.

However, these gains were capped as USD investors were reluctant to make any aggressive bets ahead of the Federal Reserve’s interest rate decision later in the week.

At the same time, the pound was left subdued yesterday as the bearish mood limited demand for the increasingly risk-sensitive currency.

What’s coming up?

The spotlight today will undoubtedly be on the publication of the Eurozone’s latest GDP figures.

Today’s data is forecast to report the Eurozone economy contracted by 0.1% in the last quarter of 2023.

This would confirm the bloc slipped into a recession in the second half of the year and is likely to weigh heavily on the euro today. On the other hand, a surprise uptick in growth could propel the single currency sharply higher.

For USD investors the focus will be on the latest US job openings and labor turnover survey (JOLTS). In which, another decline in the number of new job openings could act as a headwind for the US dollar later this afternoon.

Meanwhile, in the absence of any notable UK economic data the pound may struggle to find direction today.