ECB is expected to deliver another rate hike today. A 75bps is not fully priced in, but that’s the more likely outcome after recent chorus of hawkish rhetorics. The markets would be eager to know more about two things going forward, the terminal rate of the current tightening cycle, and the pace to get there. But it’s unlikely for President Christine Lagarde to reveal much on the two questions. Nevertheless, Lagarde might indicate a discussion on ending the reinvestment phase of the APP, which could be a hawkish sign.
Here are some previews on ECB:
- ECB Interest Rate Rise: Supersize or Jumbo?
- How Much Will the ECB Hike?
- Could the ECB Rate Decision Come to the Euro’s Rescue?
Regarding market reactions, the next move in EUR/CHF is worth some attention. On the bearish side, break of 0.9696 minor support will signal completion of the rebound from 0.9550, and the readiness for down trend resumption through this low. In case of another rebound, sustained break of 38.2% retracement of 1.0512 to 0.9550 at 0.9917 is needed to confirm a bullish turn. Otherwise, Euro’s rally elsewhere could be somewhat capped.
