ECB Preview: EUR/USD to be depressed in most cases
|The ECB faces a dilemma amid the coronavirus carnage and the weak response from leaders. Yohay Elam from FXStreet analyzes three mostly negative EUR/USD scenarios.
Key quotes
“No action: In case the Frankfurt-based institution leaves its policy unchanged and fails to pledge future action, EUR/USD would fall. This scenario has a high probability as the wind is blowing in favor of the hawks.”
“Waiting for June: During the next six weeks, Lagarde would have time to convince the hawks to go along. In that case, it is unclear if markets would be convinced, and the reaction depends on the language. The scenario has a medium probability.”
“Action now: If the bank announces an imminent enlargement of the PEPP, injecting more money into markets, governments could raise more funds and stimulate the economies. The mere announcement would send EUR/USD shooting higher, as markets do not price this low-probability option.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.