Lagarde could strike more dovish tone in ECB meeting tomorrow
The EUR/USD exchange rate rose back above the 1.17 level on Tuesday, in line with the broad move lower in the US dollar, although news of the US-Japan trade deal appears to have capped gains in the pair for the time being.
All eyes will be on whether officials in the US and European Union can strike a trade deal before next week’s deadline. Progress here remains slow.
EU countries signalled on Monday that counter-measures against the US are being prepared, which clearly suggests that officials are growing increasingly fearful of the “no deal” scenario.
Thursday’s European Central Bank announcement now comes into focus.
There will be no change in rates, nor will the bank unveil its latest macroeconomic projections. We expect President Lagarde to remain tight-lipped on future policy moves, but there is a chance that she strikes a more dovish note given the trade uncertainty and the appreciation in the Euro.
Author
Matthew Ryan, CFA
Ebury
Matthew is Global Head of Market Strategy at FX specialist Ebury, where he has been part of the strategy team since 2014. He provides fundamental FX analysis for a wide range of G10 and emerging market currencies.
