EUR faces pressure as ECB deposits hit €2.45 trillion overnight

The euro showed modest weakness against major currencies after the European Central Bank reported banks deposited a substantial €2,453.28 billion in its overnight facility, signaling persistent excess liquidity in the eurozone banking system. EUR/USD edged down 0.1% to 1.0415, while EUR/GBP fell to 0.8320. The massive overnight deposits indicate banks prefer parking funds at the ECB rather than lending, potentially reflecting economic uncertainty and tight credit conditions. German M&A activity data and ongoing geopolitical tensions are adding to euro headwinds. No overnight loans were requested from the ECB, further highlighting the liquidity imbalance. Technical indicators suggest EUR/USD is testing support at 1.0410, with resistance at 1.0440. The excess liquidity situation may limit ECB's monetary policy effectiveness and could pressure the euro further if economic conditions deteriorate or geopolitical risks escalate.