All eyes are on whether the ECB’s policy rate announcement will shift market sentiment

All eyes are on whether the ECB’s policy rate announcement will shift market sentiment

05.06.2025

In yesterday’s U.S. currency trading, the Canadian dollar fell against the yen after the Bank of Canada (BOC) announced that it had kept its policy rate unchanged at 2.75%. The CAD/JPY pair fell from 105.301 to 104.324. It dropped from the +3σ to the -3σ levels on the hourly Bollinger Bands.On the 4-hour chart, the pair is searching for direction within a zone where short- and long-term moving averages converge, while on the daily chart, the RSI is stagnating around 50 just below the 20-day moving average.

Among European currencies, the euro rose against the U.S. dollar ahead of today’s ECB policy rate announcement. The euro/dollar pair rose from 1.1357 to 1.1433. It rebounded after touching the 200-period simple moving average (SMA) on the hourly chart. On the 4-hour chart, the price has shifted from below the 20-period moving average (MA) to above it, and on the daily chart, the upward trend along the 20-period MA has continued for about 10 trading days. We will be watching closely to see if the policy rate announcement changes the market’s direction.

Today’s schedule includes Japan’s Monthly Labor Survey at 8:30, Japan’s Foreign and Domestic Securities Investment at 8:50, Australia’s Trade Balance at 10:30, Germany’s Manufacturing Orders at 15:00, the UK’s Construction PMI at 17:30, the Eurozone’s Producer Price Index and South Africa’s Current Account Balance at 18:00,at 8:30 PM, the U.S. Challenger Job Cuts Report; at 9:15 PM, the Eurozone ECB interest rate decision and policy statement; at 9:30 PM, U.S. Initial Jobless Claims; at 9:45 PM, remarks by ECB President Lagarde; at 11:00 PM, the Canadian Ivey PMI; and at 1:00 AM, remarks by Fed Governor Kugler.We will be closely monitoring the euro’s price movements to see if the ECB’s policy rate announcement leads to a shift in market sentiment.