EUR/USD falls to a session low of 1.1330, lowest since three January
Value is now slipping slightly below the help area round 1.1338-46 as markets are anticipating a extra dovish take by the ECB and Draghi later immediately. The weak PMI prints earlier is simply serving to to strengthen expectations that the ECB ought to on the very least acknowledge the financial slowdown within the area and presumably put out a extra dovish communique in comparison with what we noticed in December.
Contemplating how a lot markets predict the central financial institution to be dovish, the bar is ready actually low for a rebound within the euro to happen later – as talked about earlier right here. An extra transfer in direction of 1.1300 forward of the occasions later would solely imply that markets are pricing in a extra dovish take and any disappointment will simply see the euro collect some momentum again to the upside (although that is unlikely to go far both).
I nonetheless count on the ECB to solely change its price steerage and talk a extra dovish message on the financial outlook in March however there may be nonetheless some scope for the central financial institution to be just a little dovish later. That stated, I do not see a lot adjustments to the communique in December and as what Draghi talked about final week i.e. the economic system is experiencing a slowdown however just isn’t heading in direction of a recession.
As for EUR/USD, that ought to maintain the pair simply above the 1.1300 deal with however any rally again in direction of 1.1400 should not be a given both.