ECB Rate Decision: 26 April EURUSD Fundamental Expectations


Today is Draghi and the ECB in focus with the central bank widely expected to keep rates and guidance unchanged at today’s meeting. What more does this 26 April EURUSD Fundamental Expectations discuss? Let us see.

26 April, HotForex – The dollar has dipped after posting fresh highs versus the euro and yen, among other currencies. EURUSD posted an eight-week low at 1.2159 while USDJPY rose to an eighth consecutive day, making an 11-week high at 109.46.

26 April EURUSD Fundamental Expectations

EURUSD closed significantly below the psychological 1.2200 handle and the important 100 day moving average.  The significant 200-day moving average sits at 1.2000.  The move reflected ongoing dollar strength, although the yen has been among the leaders of the underperforming currencies over the last week, too.

Loose fiscal policy and Fed tightening expectations have been providing the fundamental underpinnings of the dollar’s ascent, with flagging global stock markets an indirect positive. On the trade front, China said today that it will be cutting the levy on imported cars to about 10-15% from 25% currently. On the geopolitical front, the focus is on what Trump decides with regard to the Iran nuclear deal.

ECB Rate Decision Expectations

Today is Draghi and the ECB in focus with the central bank widely expected to keep rates and guidance unchanged at today’s meeting. Draghi will likely sound pretty much like Praet on April 17. Cautiously optimistic on growth and the medium-term inflation outlook – to keep a phasing out of QE this year in play, but not convinced yet that inflation developments have met criteria for sustained adjustment.

So no firm commitment to an end date for asset purchases just yet and the message remains that an ample degree of stimulus remains necessary and the ECB must be “patient, persistent and prudent”. The central scenario is that the ECB will finally commit to an end date for QE in July, with a short taper program for Q4. The guidance on rates will likely be firmed up just with regard to sequencing steps, with the inflation path once again the main criteria for the exact timing of moves.

We expect the sequence to follow Nowotny’s outline, with a deposit rate hike from -0.4% to -0.2% in the first half of 2019 likely the first step.  The ECB statement will be released at 11;45 GMT with the press conference following along 45 minutes later.

Disclaimer

This article about 26 April EURUSD Fundamental Expectations was written by Stuart Cowell, Market Analyst at HotForex. The provided article is a general marketing communication for information purposes only. It does not constitute an independent investment research. Nothing in this communication contains an investment advice or an investment recommendation. It also does not contain a solicitation for the purpose of buying or selling of any financial instrument.

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