What is the outlook for the euro under multiple pressures? The June ECB decision becomes crucial.

The European Central Bank is set to announce its new interest rate decision on June 5th, with markets widely expecting the eighth rate cut. According to the latest data from LSEG, the market has fully priced in this 25 basis point reduction and generally considers the possibility of another rate cut within the year. Against this backdrop, the euro-renminbi exchange rate forecast has become a focal point for investors—how multiple policy factors will influence the relative performance of major global currencies.

How Economic Data Guides Central Bank Decisions

In May, the harmonized CPI year-on-year preliminary figure for the Eurozone fell to 1.9%, the first time below the European Central Bank’s 2% target in nearly 8 months. The easing of inflation pressures provides the central bank with further room for easing. Markets expect the ECB to revise downward its quarterly forecasts for inflation and economic growth during this meeting, paving the way for subsequent policy adjustments.

According to analysis from authoritative institutions, besides the upcoming 25 basis point rate cut, there is also potential for an additional rate reduction before the end of the year, which could ultimately stabilize the European deposit rate at around 1.75%.

Exchange Rate Trends: Will Rate Cuts Really Weaken the Euro?

While rate cuts typically exert downward pressure on a country’s currency, the euro’s performance may surpass market expectations. Uxin Bank believes that, given the relatively weak state of the US dollar itself, even if the ECB begins a rate-cut cycle, the euro has a solid foundation to remain resilient.

It is worth noting that the strategist team generally believes the market is well-prepared for further monetary easing. The EUR/USD exchange rate is expected to trade within the 1.10-1.15 dollar range. When prices decline, investors often step in with buy orders, and this counter-cyclical capital flow effectively prevents excessive euro depreciation.

Euro-Renminbi Exchange Rate Forecast: Beyond Europe

In the global currency system, the complexity of euro-renminbi exchange rate forecasts stems from multiple factors. On one hand, the ECB’s easing pace contrasts with the People’s Bank of China’s policy stance; on the other hand, dynamic changes in China-EU trade relations also influence the relative attractiveness of the two currencies.

US Dollar Trends as a Decisive Factor

Danske Bank analysts point out that for the dollar to regain market support, the key lies in whether US economic data can show significant improvement. Until this condition is met, there remains room for the euro to continue appreciating against the dollar. Trump’s trade policies and their impact on the global economic outlook are becoming important variables driving the ECB to remain cautious, indirectly supporting the euro’s relative strength.

Overall, although the rate cut policy will be a focus on June 5th, the ultimate direction of the euro depends more on the dollar’s performance itself and the evolution of global trade and growth expectations. Investors need to closely monitor these macro factors to accurately grasp the development of the euro-renminbi exchange rate forecast.