ECB monetary policy decision – Overview
The European Central Bank (ECB) is scheduled to announce its monetary policy decision this Thursday at 11:45 GMT, which will be followed by the post-meeting press conference at 12:30 GMT.
The ECB remains one of the more dovish major central banks and maintained its patient approach despite rising inflationary pressures. In fact, the headline Eurozone CPI accelerated to a 13-year high level of 3.4% in September. That said, core inflation remained below the 2% target and might allow the ECB to stick to the script that the post-lockdown inflation is transitory and leave its monetary policy settings unchanged.
The central bank would also prefer to wait for new economic projections at the December meeting before making any announcement. That said, investors will still look for clues about a potential withdrawal of monetary accommodation from the accompanying monetary policy statement and ECB President Christine Lagarde's remarks at the post-meeting press conference.
According to Valeria Bednarik, Chief Analyst at FXStreet: “Market participants are hoping President Christine Lagarde paves the way for a December announcement, as policymakers cannot keep ignoring mounting inflationary pressures. Headline inflation in the EU has printed at 3.4% YoY in September, a 13-year high, while the German Consumer Price Index in the same period rose by 4.1%, the highest in almost three decades.”
How could it affect EUR/USD?
The EUR/USD pair was seen hovering around the 1.1600 mark heading into the key event risk. A dovish message should prompt aggressive selling around the shared currency and set the stage for the resumption of the pair's recent downward trajectory from early September swing highs. Conversely, signs that the ECB is turning hawkish – though seems unlikely – should be enough to provide a strong boost to the major. Nevertheless, the ECB is more likely to infuse some volatility around the euro crosses.
Meanwhile, Valeria offered a brief technical outlook and outlined important technical levels to trade the EUR/USD pair: “From a technical point of view, the bearish trend is firmly in place, which means that a dovish stance from the ECB will likely have a larger impact on the pair. If policymakers retain their conservative stance without giving any hint of tapering, the pair could pierce the year low and extend its slump towards the 1.1470 price zone, a long-term static critical area.”
“In the unlikely case that Lagarde & Co hint at a tighter monetary policy, the pair could reach 1.1670 and later extend its rally towards the 1.1740 price zone. Selling interest will likely be strong around the latter, preventing EUR/USD from advancing further,” Valerian added further.
Key Notes
• European Central Bank Preview: Finally, some action, but no hopes for the EUR
• European Central Bank Preview: Three reasons why Lagarde is set to lower the euro
• ECB Preview: Forecasts from nine major banks, a dovish message of ongoing support
About the ECB interest rate decision
ECB Interest Rate Decision is announced by the European Central Bank. Usually, if the ECB is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the EUR. Likewise, if the ECB has a dovish view on the European economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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 trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.