The European Central Bank (ECB) is set to leave rates unchanged but its comments on the exchange rate, new forecasts and any comment about future bond-buying are all set to rock EUR/USD, FXStreet’s analyst Yohay Elam reports.
See – ECB Preview: 10 major banks expectations
Key quotes
“The ECB is unlikely to mention the rate in the statement, nor in the opening statement. However, ECB President Christine Lagarde will surely be asked about it. If she says that the bank "does not comment on the exchange rate – or dodges the question altogether – the euro may have room to rise. Conversely, if she, as the head of the institution, conveys a message of unease, the common currency may shed some ground. At the current juncture, investors expect Lagarde to express some concern about the exchange rate. Therefore, there is an upside risk for the euro if she dismisses the topic.”
“The ECB publishes new growth and inflation forecasts every three months. According to Bloomberg, the bank is set to upgrade these projections – or at least express more confidence in the recovery. The news about elevated confidence has already sent the euro higher, leaving room for a downfall if the ECB leaves them unchanged or even lowers them. Overall, an upgrade in GDP forecasts is baked into the price, leaving more room for a downside surprise.”
“Reporters are set to ask Lagarde about the progress of the bond-buying scheme and if it needs to be scaled down. She will likely reiterate that the program is set to continue advancing as planned. If Lagarde pays lip service to the hawks and suggests some funds will stay within the ECB's vaults, the euro could fall. On the other hand, opening the door to more bond-buying – well before the program expires – would boost the common currency. The most likely scenario is for Lagarde to say that no changes are expected. The bias is neutral in this case.”
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 clings to gains near 1.0700, awaits key US data
EUR/USD clings to gains near the 1.0700 level in early Europe on Thursday. Renewed US Dollar weakness offsets the risk-off market environment, supporting the pair ahead of the key US GDP and PCE inflation data.
USD/JPY keeps pushing higher, eyes 156.00 ahead of US GDP data
USD/JPY keeps breaking into its highest chart territory since June of 1990 early Thursday, recapturing 155.50 for the first time in 34 years as the Japanese Yen remains vulnerable, despite looming intervention risks. The focus shifts to Thursday's US GDP report and the BoJ decision on Friday.
Gold price lacks firm intraday direction, holds steady above $2,300 ahead of US data
Gold price remains confined in a narrow band for the second straight day on Thursday. Reduced Fed rate cut bets and a positive risk tone cap the upside for the commodity. Traders now await key US macro data before positioning for the near-term trajectory.
Injective price weakness persists despite over 5.9 million INJ tokens burned
Injective price is trading with a bearish bias, stuck in the lower section of the market range. The bearish outlook abounds despite the network's deflationary efforts to pump the price. Coupled with broader market gloom, INJ token’s doomed days may not be over yet.
Meta takes a guidance slide amidst the battle between yields and earnings
Meta's disappointing outlook cast doubt on whether the market's enthusiasm for artificial intelligence. Investors now brace for significant macroeconomic challenges ahead, particularly with the release of first-quarter gross domestic product (GDP) data on Thursday.