The European Central Bank (ECB) is set to leave its policy unchanged in April. While the Frankfurt-based institution announced it would bring forward some of its support in its March meeting, the view could be significantly different this time. That could lift the euro. Here are five reasons for a rosier message, according to FXStreet’s Analyst Yohay Elam.
EUR/USD has room to rise on expectations that the ECB would scale back its PEPP plan
“The EU recently announced a boost of 50 million doses of the Pfizer/BioNTech doses are coming this quarter, and regulators may give the green light to Johnson & Johnson's jabs by the time the ECB convenes. Accelerated prospects of exiting the crisis could be reflected in the bank's comments.”
“While some economies are still under a lockdown and COVID-19 infections are high, businesses are optimistic. The German ZEW Economic Sentiment, the Sentix Investor Confidence and Markit's Purchasing Managers' Indexes have been rising and surprising to the upside in recent months. To make forward-looking assessments, the ECB looks at these gauges of future activity and it may also shape their upbeat outlook.”
"The US recovery is set to lift the global European economies, and is also a factor in Lagarde's considerations – and that is before President Joe Biden passes his vast infrastructure bill.”
“Yields remain depressed, helping governments raise money and support the recovery. Under these circumstances, the bank may continue buying bonds at a sluggish pace, printing fewer euros while the economies continue recovering.”
“Any hint that the bank's Pandemic Emergency Purchase Program may not run its full course – refrain from using the ‘full envelope’ as the ECB says – could also be euro positive.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
AUD/USD: Extra gains need to clear 0.6700
AUD/USD managed to leave behind Tuesday’s pullback despite the stronger Dollar and on the back of the tighter-for-longer narrative surrounding the RBA, particularly amidst still elevated inflation in Australia.
EUR/USD: There is no light at the end of the tunnel yet
EUR/USD retreated further and slipped back to the proximity of 1.0660, or multi-week lows, in response to the intense move higher in the Greenback and hawkish Fedspeak.
Gold battles to retain the $2,300 mark
Gold stays under bearish pressure and trades below $2,300 for the first time in two weeks on Wednesday. The benchmark 10-year US Treasury bond yield clings to strong gains near 4.3% on hawkish Fed commentary, causing XAU/USD to stretch lower midweek.
Dogwifhat price breakout signals potential rally above $2.1 resistance
Dogwifhat (WIF) price broke out of a descending trendline on Tuesday and is trading above $2 as of Wednesday. On-chain data reveals that the largest whale has accumulated 2.3 million tokens valued at $4.67 million.
Japanese Yen at 38 year lows - Where is the bottom?
In this video: We look VERY long term charts for key levels. Why the Japanese Yen is weak. When will USD/JPY intervention happen. How to trade intervention.