EUR/USD bulls lurking in the pastures of the ECB

At 1.0902, the euro vs the greenback is higher by 0.13% and has travelled between 1.0882 and 1.0908 within a relatively tight range as markets consolidated within hourly ranges. Traders are awaiting the European Central Bank while the US dollar has been on the back foot on Thursday after tumbling overnight.

US yields paused which gave some relief to the beaten-up euro. The US 10-year yield fell 2.4bps to 2.697% after it reached as high as 2.836% on Tuesday, ahead of US inflation figures that missed the mark in the core reading, weighing on the greenback. The two-year yield was also lower at 2.3604%. EURUSD was rising 0.54% on Wednesday, though the single currency fell against sterling. This left the dollar index (DXY) which measures the dollar against six peers, trading between 99.663 and 99.884 in Asia after a 0.52% overnight tumble.

Eyes on the ECB

The market is getting positioned for a hint that the ECB might draw a line under its quantitative easing programme in the second quarter rather than the third. However, analysts at Westpac expect that the ECB Governing Council will keep its key interest rates on hold at their April meeting, the deposit facility at -0.5%.

''Bond purchases should also continue until June but then most likely cease. The focus will be on President Lagarde’s press conference, including any guidance on how long after the end of QE rates might start to rise, given the difficult combination of inflation a long way above target and growth downgrades due to soaring energy prices.''