ECB will be a critical event this week as US dollar looks into the abyss
|The euro is flying high and the US dollar is on its knees following a series of bearish events that have taken the bulls by surprise.
The central banks are converging with members of the European Central Bank emerging from the flanks with a hawkish narrative.
This, in contrast to the dovish twist at the Federal Reserve, has seen EUR/USD rally by near to 2.10% since 20 Aug and its lowest point of the US dollar bull cycle.
The ECB is due to make its next policy decision on Thursday.
In a recent Reuters poll, around 42 surveyed said, “The European Central Bank will announce a cut to the pace of its emergency bond purchases from next quarter at its meeting this month but will keep buying bonds through 2024 at least under its main program, and possibly much longer.”
However, “We are monitoring euro-area inflation, we should monitor it very accurately, but without making conclusions too soon,” EU's commissioner Paolo Gentiloni said during the Ambrosetti Forum in Cernobbio, Italy.
“I think it would be a big mistake because the mainstream consensus is on the fact that this inflation is still a temporary phenomenon.”
There has been no immediate reaction to the dovish remarks in thin trade at the start of the week.
EUR/USD remains capped at resistance: EUR/USD Price Analysis: Bears lurking at daily resistance
Meanwhile, the US dollar is under pressure, but it may not be game over, yet:
US dollar: A bearish false start?
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