Several analysts detected a dovish tone in the ECB's statement, causing the euro to slide against various other major currencies.

The European Central Bank (ECB) interest rate announcement increased the euro. The EUR/USD stalled around 1.0526 at the beginning of the New York session on Thursday, October 26th. Meanwhile, the EUR/GBP pair tumbled to around 0.8690.

eurusd today

The ECB has raised interest rates 10 times in a row since 2022. However, they decided not to do so again in today's monetary policy meeting.

The ECB's policy guidance suggests that monetary policy will remain tight for some time. The European Central Bank stated that inflation has not reached its target, so they are prepared to raise interest rates again if future data points towards an undesirable situation. Nevertheless, some analysts "smelled" a dovish tone in the ECB's statement.

According to Carsten Brzeski Global Head of Macro at ING Bank, the market anticipates that today's dovish pause will ultimately be the end of the ECB interest rate hiking cycle. Unless the Eurozone economy miraculously recovers in the coming weeks.

"Higher-for-longer ECB rates are the 'party line'. But they acknowledge that inflation dropped markedly in September... this looks like not just the last ECB hike but a countdown to when we get the 1st cut in 2024," says Viraj Patel, macro strategist at Vanda Research.

ECB still has several other alternatives to tighten monetary policy without raising interest rates, namely by ending the reinvestment of the Pandemic Emergency Purchase Programme (PEPP) or increasing bank reserve requirements (minimum reserve requirement).

Today, the ECB announced that it will continue reinvesting the PEPP until December 2024, but some analysts speculate that the next ECB meeting may accelerate this process.