EUR/USD market turns indecisive ahead of ECB, today's close pivotal

  • EUR/USD created a doji candle yesterday, which is considered a sign of indecision in the market place. The focus, therefore, is on today's close. 
  • The European Central Bank is expected to cut outlook and announce liquidity measures. 
  • The EUR will likely take a beating if the ECB introduces dovish tweak to its forward guidance and announces significant downward revisions to growth forecasts. 

EUR/USD created a doji candle yesterday, signaling indecision in the market place ahead of the European Central Bank (ECB) rate decision. 

The central bank is expected to keep rates unchanged today and cut the growth outlook by enough to warrant new loans – long-term refinancing operations (LTROs). 

The latest ECB staff projections are very likely to show a downward revision of 2019 GDP growth (1.7 percent in the December projections), according to ING. Further, the inflation forecasts are likely to keep largely unchanged at 1.6 percent, 1.7 percent and 1.8 percent for the period 2019-2021. 

The shared currency will likely pick up a strong bid, if the ECB's projections match market expectations and the central bank refrains from introducing another dovish tweak to its forward guidance, having accepted in December that balance of risks are moving to the downside. In that case, the EUR will likely close above 1.1325 (previous day's high), confirming a bullish doji reversal. 

The common currency, however, could take a beating and may close well below 1.1285 (previous day's low), confirming a bearish doji continuation if the central bank announces a significant downward revision to 2020 and 2021 GDP forecasts and adds a dovish tweak to forward guidance, confirming market fears that the ECB may have to cut rates in the near future. 

The Research Department at BBVA believes the probability of the ECB striking a cautious tone with a dovish change in the forward guidance is high as recent news have been mostly negative: disappointing macro data, inflation expectations at very low levels and growing risks due to global concerns, despite the stabilization in financial markets and the partial easing of concerns about protectionism (and more recently over Brexit). 

Technical Levels

    1. R3 1.1369
    2. R2 1.1348
    3. R1 1.1329
  1. PP 1.1307
    1. S1 1.1289
    2. S2 1.1267
    3. S3 1.1249


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.

Feed news

Latest Forex News

Editors’ Picks

EUR/USD: Doji on D1, 1.1040/45 resistance question latest recovery

The EUR/USD pair’s latest recovery seems to be challenged soon considering Monday’s Doji candlestick formation on D1 and nearness to the key resistance-confluence. The quote currently takes the bids to 1.1030.


GBP/USD: Inside day makes Tuesday's close pivotal

GBP/USD created an inside bar candlestick pattern on Monday, making Tuesday's GMT close pivotal. An inside bar occurs when the daily high and low falls within the preceding day's trading range. The pair hit a high at 1.2650.


USD/JPY unchanged on 108 handle in Tokyo opening hour, eyes on key events

USD/JPY is steady in Tokyo's opening hour, down -0.02% despite the concerns over the 'Phase1' deal made between China and the US on Friday. Looking ahead, eyes are on US Industrial Production and Fed speakers.


Gold: Bears look for a break below the trendline support

The price had been sent lower below the 21 and 50-day MA converging and the 7th Oct lows. Trendline support guards a test of a 50% mean reversion of the late June swing lows to recent highs around 1480 will be encouraged. 

Gold News

UK jobs report preview: GBP/USD set to react to figures that go with the Brexit mood

Finding a job in the UK is more accessible than in the past and pay is rising – but that does not move the pound these days. The employment report is scheduled two days ahead of the critical EU Summit and 16 ahead of Brexit Day. 

Read more