Markets pay close attention to ECB meeting tonight, golden opportunity to long EUR/USD?
ECB meeting tonight could set the tone of the direction of EUR/USD in entire second half the year, the meeting could be even more important to global capital market than the Fed meeting next week.
- The ECB has given no signal so far that it plans to alter either its QE programme for this year or interest rates during that time, market is paying high attention to whether Draghi will hint to taper QE later this year or earlier next year.
- June meeting will coincide with new forecasts for growth and inflation from the eurozone’s central banks; forecasts published in March indicated that growth would be 1.8 per cent this year, 1.7 per cent in 2018 and 1.6 per cent in 2019. Higher growth adjustment will put upward pressure for the EUR/USD.
- ECB is coming under increasing pressure from lawmakers to reveal more about their holdings of corporate bonds. 44 members of the European Parliament from across the EU have signed a letter to Mr Draghi calling on the region’s central bankers to release more information on their holdings of around 75bn euros of corporate debt.
- From the technical point of view, EUR/USD may break 1.13 tonight if Draghi’s words turn into more hawkish.
Fullerton Markets Research Team
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