22.12.202510:01 Forex Analysis & Reviews: The ECB Does Not Intend to Intervene in Current Policy

The euro is feeling quite comfortable as the European Central Bank no longer intends to interfere with the current monetary policy. Last week, ECB Governing Council member Madis Muller said it is still too early to talk about how borrowing costs might change going forward. Speaking the day after the ECB left its deposit rate unchanged at 2% for the fourth consecutive time, the Estonian official said there is currently no need for adjustments, but did not go into details.

"If you ask what will happen in six months or later, honestly, it is too early to speculate," Muller said.

This stance sends a clear signal to the market: the regulator is satisfied with the current monetary policy and sees no need for sharp changes, at least in the near term. Such predictability is generally viewed positively by investors seeking stability and clear guidance amid global economic uncertainty.

"One can imagine scenarios developing in both directions. If the euro area economy performs worse and inflation continues to slow, then there may be grounds for further interest rate cuts. But one can also imagine the opposite situation," the policymaker said.

The impact of Muller's remarks is reinforced by the overall macroeconomic picture in the euro area. Inflation remains around the ECB's target level and shows signs of easing, allowing the regulator to maintain a wait-and-see approach. At the same time, economic growth in the region remains modest, which prevents the ECB from tightening policy for fear of exacerbating the situation.

As a result, the euro enjoys relative stability, supported by the absence of expectations for any radical steps from the ECB. However, the long-term outlook for the European currency will largely depend on further inflation dynamics and economic growth, as well as the geopolitical situation in the region and globally.

As for the current technical picture of EUR/USD, buyers now need to focus on taking the 1.1730 level. Only this would allow a move toward testing 1.1750. From there, the pair could climb to 1.1770, but doing so without support from major players would be quite difficult. The most distant target would be the high at 1.1805. In the event of a decline, only around the 1.1705 level do I expect any serious action from large buyers. If there is no activity there, it would be preferable to wait for a retest of the 1.1685 low or to open long positions from 1.1650.