ECB monetary policy decision is a major focus for today. Coronavirus situation is “very serious” as described by European Commission President Ursula von der Leyen. Eurozone economy is destined to contract further in Q4 with tens of millions of people back in lockdowns. Heading reading is negative and would remain so for the near term. Yet, ECB is still unlikely to act “out of character” and deliver more monetary easing today. December remains the timing to do so as expected by most analysts. President Christine Lagarde, though, should clearly indicate that ECB is ready to use the PEPP as the main tool again in December, with extension and expansion.
Suggested readings on ECB:
- ECB Preview – More Stimulus to Come in December as Recovery Loses Momentum
- ECB Preview: A Milestone To Another Stimulus Package
Euro and Canadian Dollar are two of the weakest ones for the week. Euro is having a slight upper hand thanks the drag from oil prices. Technically, we’re still favoring the case that corrective pattern from 1.5978 has completed with three waves down to 1.5389. Break of 1.5738 resistance would bring retest of 1.5978/91 key resistance zone. Such development would help cushion part of Euro’s decline elsewhere. However, break of 1.5522 minor support would extend the correction with another falling leg, probably even through 1.5389. If happens, that would be an indication of a full across the board selloff in the common currency. We’ll see how it reacts after ECB.
