- 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
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. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD stabilizes near 1.0800 as trading action turns subdued
EUR/USD holds steady near 1.0800 on Thursday and remains on track to end the day in negative territory following upbeat macroeconomic data releases from the US. The action in financial markets turn subdued as trading volumes thin out heading into Easter holiday.
GBP/USD extends sideways grind above 1.2600
GBP/USD fluctuates in a narrow channel above 1.2600 on Thursday. The better-than-expected Initial Jobless Claims data from the US and the upward revision to the Q4 GDP growth help the USD stay resilient against its rivals and limits the pair's upside.
Gold pulls away from daily highs, holds above $2,200
Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.
XRP price falls to $0.60 support as Ripple ruling doesn’t help Coinbase lawsuit against SEC
XRP programmatic sales ruling by Judge Torres was completely rejected by another US Court that ruled in favor of the SEC in a lawsuit against Coinbase.
Portfolio rebalancing and reflation trades emerge into Q2
Yesterday’s price action pointed at a possible end-of-quarter portfolio rebalancing as the session saw the laggards of the quarter like Apple and Tesla gain, and the stars like Microsoft and Nvidia retreat.