ECB Monetary Policy Decision – Overview
The European Central Bank (ECB) is expected to announce your monetary policy decision this Thursday at 11:45 GMT. The ECB adjusted the inflation target of “2% symmetric” after completing the review of the monetary policy strategy, announced earlier this month. Furthermore, ECB President Christine Lagarde hinted at a change in the central bank’s orientation last week, making this week’s meeting very important. While the ECB is widely expected to keep monetary policy unchanged, the market will focus on any significant changes in forward orientation.
As Deutsche Bank analysts explain: “We expect some changes in guidance and communications around the new average inflation target released earlier this month.”
How could it affect the EUR / USD?
Given the disagreement among members on the outlook for monetary policy and the risk related to the pandemic, analysts expect a “dovish” bias in the statement. This should be enough to spark some selling around the common currency and force the EUR / USD pair to prolong its recent downward trajectory seen in the last two months or so.
Meanwhile, Yohay Elam, an analyst at FXStreet, offered a brief technical outlook for the EUR / USD pair: “The euro / dollar has been setting bearish lows and descending highs, a downtrend. It is still suffering bearish momentum on the four-hour chart and is trading below the 50, 100 and 200 simple moving averages. Furthermore, the Relative Strength Index (RSI) is balanced, maintaining a significant distance from conditions. oversold. In general, there is room for falls. “
Yohay also highlighted important technical levels: “Some supports await at 1.1770, last week’s low, followed by the new three-month low of 1.1750. Lower, 1.1717 and 1.17 await for EUR / USD. Some resistance is at the daily high of 1.1800, followed by 1.1820, 1.1850 and 1.1880 (all levels that have slowed recovery attempts in recent days). “
About the ECB’s interest rate decision
The decision on the ECB’s interest rates is announced by the European Central Bank. Generally, if the ECB is “hawkish”, that is, a bias towards adjustment, on the inflationary outlook for the economy and / or raising interest rates, they are positive, or bullish, factors for the EUR. Likewise, if the ECB has a “dovish” view on the European economy and maintains or reduces the interest rate, it should be considered negative, or bearish.