ECB Preview: More is better for the EUR/USD – TDS
The EUR is likely to react more to the ECB's influence on sentiment than traditional monetary policy signals. Here, more from the Governing Council is likely to be seen as better for the currency, for now, per TD Securities.
Key quotes
“Hawkish (10%): ECB has done enough. EUR/USD may knee-jerk higher but should begin to weaken towards 1.0765 as sentiment sours because the ECB is unable or unwilling to do more.”
“Base Case (50%): Rates, QE, forward guidance all unchanged. ECB to buy ‘fallen angels’ & extend LTROs as downside risks to growth/inflation are severe. EUR/USD shakes off downbeat outlook & grinds higher on continued support.”
“Dovish (25%): Additional liquidity support. EUR/USD may dip at first but rebounds on better sentiment. The ECB remains the only game in town.”
“More Dovish (15%): ECB increases size of PEPP. ECB will indeed do whatever it takes in a timely manner, given swift deterioration in growth and inflation outlooks. EUR/USD extends gains toward key resistance near 1.10.”
Author
FXStreet Team
FXStreet
