The euro resumed an active decline yesterday, which may continue today as well. More and more representatives of the European Central Bank have recently been stating their intention to ease further monetary policy, which does not add strength to risky assets, especially the euro. According to ECB Governing Council member Olli Rehn, investors' expectations that the ECB will further ease monetary policy twice this year and reduce borrowing costs to 2.25% by 2025 are justified.

The head of the Finnish central bank noted that while officials should ensure inflation returns to 2%, they should not excessively restrain economic activity. "If you look at the market data, you will clearly see that two rate cuts by the end of this year won't do much harm," Ren said in an interview in Helsinki. "In my view, these are reasonable expectations."

Recall that the ECB cut rates this month after a historic series of hikes aimed at curbing the strongest inflation in the eurozone. Since then, most officials have been evasive about what comes next, mindful of recent spikes in consumer prices, consistently high wage growth, and geopolitical upheavals.

Investors are betting that in 2024, they will see two more cuts in borrowing costs, with the next one expected as soon as September this year. Against this backdrop, German bonds declined across the curve at the start of trading on Wednesday. The yield on 10-year bonds rose by two basis points to 2.43%, consistent with recent ranges.

Emphasizing that the ECB will not pre-select any specific path, Ren made it clear that further reductions are reasonable to expect. "If we see that the disinflationary process continues and moves towards our target of 2% in the medium term, it is reasonable to assume that we will adopt a more accommodative stance and continue to lower rates," he said. "Despite the recent spike in inflation, the deflationary process continues, as we all know, this is quite a bumpy road."

Unlike some of his colleagues, who would prefer to make rate decisions at quarterly meetings accompanied by fresh economic forecasts, Ren views each policy meeting as an opportunity for further action. "I don't think we should limit ourselves unnecessarily," he said. "Otherwise, we could also cancel the so-called interim meetings, save fuel, and save the planet."

Speaking about the economy, Ren noted that Europe is moving towards gradual recovery this year and that growth should accelerate next year. However, he also cautioned against placing excessive burdens on households and companies.

Despite this, optimism among risk asset buyers is diminishing as the Federal Reserve's tough stance continues to stimulate demand for the US dollar.

Regarding the current technical picture of EUR/USD, buyers now need to consider how to reclaim the level of 1.0730. Only this will allow targeting a test of 1.0760. From there, it may move up to 1.0790, but doing so without support from major players will be quite problematic. The ultimate target is set at a maximum of 1.0820. If the trading instrument declines only around 1.0700, I expect some significant actions from large buyers. If no one intervenes there, it would be advisable to wait for a retest of the minimum at 1.0670 or open long positions from 1.0640.

Regarding the current technical picture of GBP/USD, pound buyers need to overcome the nearest resistance at 1.2700. Only this will allow targeting 1.2735, above which breaking through will be quite problematic. The ultimate target is around 1.2760, after which there could be talk of a sharper upward move towards 1.2780.

In case the pair declines, bears will attempt to take control below 1.2670. If successful, breaking this range will deal a serious blow to bullish positions, pushing GBPUSD toward a minimum of 1.2645 with a potential downside of 1.2620.