ECB Interest Rate to Weigh on the Euro’s Movement

Key points

• ECB to give interest rate that could weigh on the Euro movement
• ECB to give eurozone economic outlook that is still uneven
• Technical outlook

ECB interest rates set to weigh on the Euro movement

Today’s Euro markets will focus on the ECB interest rate decision and monetary policy statements. The policy meeting will decide the position of the Dax 30. Investors focus on how the ECB plans to deal with the recent increase in borrowing costs.

We expect no change in the interest rate. It could stay unchanged despite the recent sell-off in the global bond markets and its impact on financing conditions within the major currency markets. With no interest rate changes expected, the monetary policy statement will be the key factor in the market movement as the ECB president is expected to set a new tone.

The economic outlook of the eurozone is still uneven at this current stage. This will be a key to the meeting for today. The investors will wait to hear what plans Lagarde has to say about Euro countries’ economy and the recent global bonds market movement. A clear tone on the plan to hear Euro countries will be key for the Euro currency rally, putting the Euro at a very solid position against the U.S Dollar.

We expect the interest rate to stay unchanged and to hear more about the pandemic emergency purchase program in Europe.

EURUSD technical outlook

EURUSD has been in the selloff in recent months. This comes after the pair rallied up from its lowest level of March 2017 at $1.06. The U.S Dollar decline has helped the Euro’s rally. The latter takes advantage of the weak movement of the U.S Dollar.

Technically, the price has been moving within a consolidation mode in the monthly timeframe within the level of $1.15 and $1.23, with the U.S Dollar gaining the most against the Euro in the last three months of trading.

The long-term bullish movement on the EURUSD will be decided, should the price breakout of the $1.23 level. Fundamentally, the recent strong data from the U.S, including the NFP data that showed a strong recovery in the labor market, could help give the bears a direction in the market.