ECB maintains rates unchanged at July meeting, markets await guidance

The European Central Bank kept its key interest rates unchanged during the July 2025 monetary policy meeting, in line with market consensus. The deposit facility rate remains at its current level as policymakers assess the impact of previous tightening measures on the eurozone economy. The decision reflects the ECB's cautious approach amid mixed economic signals, with inflation showing signs of moderation while remaining above the 2% target. Market reaction was initially muted, with EUR/USD holding near 1.0900 levels immediately following the announcement. However, currency pairs involving the euro showed increased volatility as traders positioned for President Lagarde's press conference. The unchanged stance suggests the ECB is entering a prolonged pause phase, potentially keeping rates elevated through the summer months. This development supports euro strength against currencies where central banks are considering rate cuts, particularly affecting EUR/GBP and EUR/CHF cross pairs.