EUR/USD has ticked higher in the Thursday session. Currently, the pair is trading at 1.1237, up 0.14% on the day. On the release front, German Factory Orders slowed to 0.3%, above the estimate of 0.1%. Eurozone GDP improved to 0.4%, matching the estimate. Later in the day, the ECB releases its key interest rate, which is expected to remain at a flat 0.00%. In the U.S., the key event is unemployment claims, which is projected to remain steady at 215 thousand.
All eyes are on the ECB, which holds its policy meeting on Thursday. With policymakers expected to hold rates at 0.00%, investors will be focused on the policy statement, and follow-up comments from Mario Draghi. Traders should be prepared for a dovish stance at Draghi’s post-meeting press conference. The ECB will also provide new outlooks for inflation and growth. In March, the ECB forecast GDP at 1.1% and inflation at 1.2% in 2019. Will the bank revise the upcoming forecast upwards? If so, investors could respond with a thumbs-up and drive the euro higher.
Since raising rates back in December, the Federal Reserve has sounded neutral with regard to rate movement. However, the passive stance was shattered this week, with Fed Chair Jerome Powell hinting at a rate cut. On Tuesday, Powell said that the Fed would “act as appropriate to sustain the expansion”. It was also noteworthy that Powell did not mention his “patient” approach to monetary policy, which has been a buzzword in his recent comments. Also this week, St. Louis Fed president said that the Fed might have to lower rates shortly due to low inflation and the ongoing trade war with China.