Euro Calm, Markets Await Crucial ECB Meet

The euro started the week with limited gains. In North American trade, EUR / USD is trading at 1.1817, up 0.12% on the day.

ECB was expected to adjust forward guidance

ECB monetary policy meetings are generally tame issues that cause limited movement in the markets. The meeting next Thursday is likely to be another, and could well be a market move. The reason is that the ECB expects to implement major changes in policy. The ECB presented a strategic review earlier this week and ECB president Christine Lagarde said there will be a review of previous leadership to align it with the strategic review. This means we could see some major changes to forward guidance at the meeting.

The strategic review raised inflation to 2% (up from “below, but close to 2%) and also stated that the central bank will accept“ a a transitional period in which inflation is moderately above target. “These changes are likely to be incorporated into the bank’s previous guidance.

The key question is do these expected changes in policy have a price in EUR / USD? The ECB remains tough and shows no signs of raising interest rates any time soon. Aside from some strong surprises in this week’s session, the current weakness of EUR / USD is likely to continue.

The ECB viewed by the markets is very small, along with the Swiss and Japanese central banks. With the ECB expected to continue its good stance, the euro is unlikely to show a significant rise this week. Once the ECB meeting is behind us, investors will be able to focus on some “difficult” data, including consumer confidence and reports on eurozone PMI.

EUR / USD Technical

• EUR / USD fell close to 1.1759 before recovering. Below is support at 1.1711
• There is resistance at 1.1867 and 1.1927