The EUR/USD trades higher in range this Thursday, with the pair having so far reached a daily high of 1.2674, albeit retracing some ahead of the key event of the day, ECB meeting. There has been some early buying interest ahead of the news, with investors waiting for the event to trigger a big upward correction in the pair. But can Draghi do so?
Late Wednesday in Italy, he made a speech anticipating the may concern to discuss today is inflation. Among the remarks, he said that low rates are not enough to boost the economy, and that “fiscal and structural policies must also do their part.” And while market awaits him to launch more measures, there are big chances he decides to take a wait and see stance, having already repeated several times rates are at their lowest possible, after last meeting announcements.
In the meantime, stocks are in selloff mode, with US indexes at levels not seen since early August probably the main reason of recent short term dollar weakness. Japanese Nikkei lost in 2 days all of September gains, fueling yen gains.
So what will the EUR/USD do? My take is that with no new measures, market may feel disappointed and resume the downside, with a break below recent low at 1.2570 pushing buyers out of the market and triggering stops: next downward target comes then at 1.2520/30 price zone. If on the other hand, the ECB head manages to favor its local currency, the recovery can extend up to 1.2740 price zone. Anyway, US employment figures early Friday will have the final word on whether the recovery can or not extend in time.
View Live Chart for EUR/USD
Late Wednesday in Italy, he made a speech anticipating the may concern to discuss today is inflation. Among the remarks, he said that low rates are not enough to boost the economy, and that “fiscal and structural policies must also do their part.” And while market awaits him to launch more measures, there are big chances he decides to take a wait and see stance, having already repeated several times rates are at their lowest possible, after last meeting announcements.
In the meantime, stocks are in selloff mode, with US indexes at levels not seen since early August probably the main reason of recent short term dollar weakness. Japanese Nikkei lost in 2 days all of September gains, fueling yen gains.
So what will the EUR/USD do? My take is that with no new measures, market may feel disappointed and resume the downside, with a break below recent low at 1.2570 pushing buyers out of the market and triggering stops: next downward target comes then at 1.2520/30 price zone. If on the other hand, the ECB head manages to favor its local currency, the recovery can extend up to 1.2740 price zone. Anyway, US employment figures early Friday will have the final word on whether the recovery can or not extend in time.
View Live Chart for EUR/USD
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