FORTRADER: The most important event of the trading week is undoubtedly the meeting of the ECB, which the market expects to expand its monetary stimulus program. Most experts predict a decline in the euro/dollar pair, with only the magnitude of the drop differing. At the same time, some analysts state that all changes in the ECB’s monetary policy have already been reflected in the euro’s exchange rate.
How likely is it that, following the ECB meeting, the EUR/USD pair could fall, even reaching annual lows, and then enter a long-term upward correction phase?
ECB Meeting: Euro/Dollar Rate Will Trade Between 1.05 and 1.08
Sergey Kozlovsky, Head of the Analytical Department at Grand Capital: The euro/dollar pair continues to be in a downward trend. The weakness of the euro, including due to the quantitative easing (QE) program implemented by the ECB, is exacerbated by the overall strengthening of the U.S. dollar on the foreign exchange market. There is only 1.1% left to reach the annual low (1.0480) as of the time of writing, with the euro/dollar pair currently trading near 1.0600.
At this moment, there is no reason to claim that the decline will stop soon, and even negative U.S. data will not help. From a technical perspective, selling the euro looks particularly promising, especially from the current level.
We believe that at the upcoming ECB meeting, there will be no clear signals regarding an expansion of QE. This fact will not mean anything positive or negative, but by default, the market will perceive it as a continuation of the current ideas, which again means selling EUR/USD.
We do not expect a sharp decline – the movement angle will remain, possibly with a local increase in volatility. The target for the next week is 1.0500; by the end of the year, within the profit-taking framework, a correction to 1.0800 may occur.
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FAQ
What is the main factor affecting the EUR/USD pair?
The main factor affecting the EUR/USD pair is the monetary policy decisions of the European Central Bank (ECB) and the Federal Reserve (Fed).
Can the EUR/USD pair reach its annual lows?
Yes, the EUR/USD pair has the potential to reach its annual lows if the ECB does not provide significant support to the euro.
What is the expected range for the EUR/USD pair after the ECB meeting?
The EUR/USD pair is expected to trade between 1.05 and 1.08 following the ECB meeting, depending on market sentiment and economic data.
