Dollar bulls were ready to pounce on the euro on Thursday should the European Central Bank sound dovish on rates later in the day, given the Federal Reserve had pressed the pause button on its easing cycle overnight

Markets are more than fully priced for the ECB to trim rates by 25 basis points to 2.75% later on Thursday, with even a small chance of 50 basis points given how weak the EU economy is.

"The euro area's inflationary pulse is evaporating, and the risk of a sustained inflation undershoot is material," warned analysts at ANZ.

"The complex economic and political challenges facing the euro area's largest economies increases the onus on the ECB to support growth."

This is one reason markets are priced for further cuts in March, April and June, with about 90 basis points of easing implied for 2025.

Source: Reuters