EUR drops after Stournaras comments

EUR took a hit this morning following comments from Yannis Stournaras, Governor of Bank of Greece and member of ECB Governor Council. Stournaras made a number of dovish comments that have put pressure on common currency. Below are key takeaways from his speech:

• We need to start cutting rates soon
• We have to cut rates twice before the summer break
• Should not exaggerate risk of wage-price spiral
• Does not think that ECB cannot cut rates before Fed
• Four rate cuts in 2024 seem reasonable

While it is no secret that rates cuts are coming, recent comments from ECB members suggested that the first rate cut may not be delivered until June meeting. However, remarks by Stournaras that two rate cuts are needed before summer break hint that ECB will have to begin cutting rates earlier than data.

EURUSD took a hit following Stournaras comments and moved to a fresh daily low. The near-term support zone to watch can be found in the 1.0930 area. Source: xStation5