European Interest Rate Decision | April 2025

The European Central Bank (ECB) will announce its latest interest rate decision today, Thursday, April 17, at 14:15 CET—a move that could determine the direction of the euro and financial markets. Predictions suggest that in line with the ongoing trend of consecutive cuts since last autumn, the main interest rate will be reduced from 2.65 % to 2.4 %.

Given the crucial role of this rate in providing liquidity to banks and its direct impact on the euro strength, traders are closely watching this announcement. However, the real significance goes beyond the headline number; the market is looking for clues about the future trajectory of European monetary policy.

Possible Scenarios and Market Reactions

There are three main scenarios for today’s decision, each with the potential to steer the market in a different direction:

1. Rate reduction to 2.4 % | The Base scenario

If the rate is reduced as expected, the initial response from the market may be limited, as this scenario is largely priced in. However, the direction of the Euro and related assets will depend more on the tone of the press conference following the announcement.

2. Greater-than-expected reduction | Additional pressure on the Euro

If the Central Bank cuts the rate more than anticipated (for example, to 2.25% or lower), the euro may weaken further against other currencies, and pairs such as EUR/USD could decline. This message could indicate deeper concerns regarding the eurozone economy.

3. Rate stabilization | Market Surprise

If the ECB holds rates steady, the Euro is likely to face rapid growth. Traders might interpret this as a temporary pause in the expansionary cycle, even though this scenario seems unlikely now.

The focus of traders should not be on the final number, but they must be prepared for the volatility arising from the tone and outlook presented during the press conference.

ECB Rate Trend: From Tightening to Easing

Since October 2024, the ECB has lowered rates at every policy meeting, moving from 3.65 % then to the anticipated 2.4 % today. This steady decline marks a clear shift from contractionary to expansionary policy stance.

For traders, understanding this downward trajectory is crucial, as it means the euro is likely to remain under pressure from supportive policies—unless new economic data forces the ECB to pause or reverse course.

The Importance of the Press Conference; The Market Is Not Done Yet!

45 minutes after the rate announcement, ECB President, Christine Lagarde, will hold a press conference to discuss the decision and the future outlook. For traders, this segment may be even more significant than the rate itself, as the market typically anticipates the rate figure, but the tone of the discussions can catch the market off guard.

What should be monitored?

A dovish tone (cautious, signaling further cuts) could exert downward pressure on the euro, even if rates are expected to decrease.

A hawkish tone (hinting at a pause or stabilization) may lift the euro, as it would suggest an early end to the easing cycle.

Any direct reference to the next meeting in June, or to data-dependency (such as inflation or economic growth), could provide a clearer roadmap for the euro’s future.

For those trading euro pairs, European indices, or even gold and the dollar, this press conference is a pivotal moment—not just for today, but for the weeks ahead. Traders can use Trendo Trading Platform to execute scalping strategies on EUR/USD and react swiftly to the ECB’s announcement and subsequent market moves.

Summary and Outlook

Regardless of the final rate, today’s ECB meeting marks a critical juncture in the eurozone’s monetary policy path. If the anticipated cut to 2.4 % materializes, it will confirm that the ECB remains in a supportive phase, but the key question is how much longer this trend will continue?

Given the ongoing decline in inflation and the absence of sustainable signs of economic growth improvement, the market currently anticipates at least one or two more rate cuts in the coming months. However, today’s tone from the ECB could challenge these expectations and clarify the rate trajectory.

For traders, market opportunities are not limited to the short-term reaction of the euro; rather, effective risk management and adjusting strategies to align with new policy signals will be crucial for success during this critical period. Focusing on upcoming meetings, particularly the session on June 5, 2025, is of great importance for assessing the sustainability of this trend.