ECB rate decision is the major focus today. It’s widely expected to keep monetary policy unchanged for now. That is, main refinancing, marginal lending and deposit facility rates will be held unchanged at 0.00%, 0.25% and -0.40% respectively. Nevertheless, president Mario Draghi should provide explicit dovishness in the press conference that set the stage for policy easing in September. In particular, focuses will be on issues including rate floor, restart of QE, and emphasis on “symmetric” inflation target.
Suggested readings:
- ECB To Guide On More Stimulus
- ECB Preview – Expecting Change in Forward Guidance and Hints on QE Resumption and Tiering
- ECB Preview: Warming Up For Draghi’s Grande Finale
- Slow Growth, Low Inflation: What’s the ECB to Do?
Euro is currently among the weakest ones for the week on dovish ECB expectations. EUR/CHF is now pressing 61.8% projection of 1.2004 to 1.1173 from 1.1476 at 1.0962. Sustained break there will likely bring downside acceleration to 100% projection at 1.0645 next.
EUR/USD is set to take on 1.1107 low. For, we’re not expecting a solid break there yet. However, the pair is starting build up downside momentum, as seen in daily MACD. Firm break of 1.1107 would resume the down trend from 1.2555.
