Broker of the Week Oanda - Read Full Review

Free Top Brokers Comparison Service


Focus on ECB’s take on the exchange rate


  • EUR/USD has witnessed a bull market pullback ahead of ECB’s rate decision. 
  • The central bank is expected to maintain the status quo on interest rates and bond purchases.
  • The ECB may attempt to talk down the euro, with the economy facing recession risk.

EUR/USD’s rally has stalled over the past two weeks, and the pair could suffer deeper losses if the European Central Bank (ECB) expresses displeasure over the single currency’s strength on Thursday. 

At press time, the currency pair is trading near 1.2130, representing a 0.3% gain on the day. While the pair has pulled back from multi-month highs near 1.2350 observed earlier this month, it is still up at least 500 pips from early November lows near 1.16.

The central bank is widely expected to keep the interest rate and the asset purchase program unchanged, having partly boosted the level of policy accommodation until early 2022 in December. 

However, the possibility of the central bank jawboning the currency cannot be ruled out.

The stronger euro got attention from policymakers in December. “Concerns were voiced over risks related to developments in the exchange rate that might have negative consequences for the inflation outlook,” ECB’s December revealed said. The minutes also took note of the euro’s record nominal effective exchange rate and its disinflationary impact. 

Besides, the Eurozone economy is facing the risk of recession due to the worsening coronavirus situation and political tensions in Italy and other nations. 

EUR/USD may probe the recent low of 1.2053 if the central bank uses strong words while noting the unwanted effects of the euro’s strength. “The strong euro is a problem, but keeping the door open to more asset purchases if there’s further [economic] weakness could in many ways achieve the same goal of easing demand for the currency,” BK Asset Management’s Kathy Lien noted. 

Technical levels



Source link

We will be happy to hear your thoughts

      Leave a reply

      Trading foreign exchange on margin carries a HIGH LEVEL OF RISK, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.

      Advertiser Disclosure: helps investors across the globe by spending over hours each month testing and researching online brokers.

      How do we make money? Our partners compensate us through paid advertising.

      While partners may pay to provide offers or be featured, e.g. exclusive offers, they cannot pay to alter our recommendations, advice, ratings, or any other content throughout the site.

      Furthermore, our content and research teams do not participate in any advertising planning nor are they permitted access to advertising campaign data.

      Disclaimer: It is our organization’s primary mission to provide reviews, commentary, and analysis that are unbiased and objective.

      While has some data verified by industry participants, it can vary from time to time.

      Operating as an online business, this site may be compensated through third-party advertisers.

      Our receipt of such compensation shall not be construed as an endorsement or recommendation by, nor shall it bias our reviews, analysis, and opinions.

      Best Forex Brokers Reviews
      Reset Password
      Compare items
      • Total (0)