ECB monetary policy decision - Overview
The European Central Bank (ECB) is scheduled to announce its monetary policy decision later today at 1445 GMT and will be followed by the usual post-meeting press conference at 1230 GMT. The central bank is widely expected to stick to its plan for winding down the bond-buying program by the end of this year and leave interest rates unchanged at least until next summer.
Mario Blascak, FXStreet's own European Chief Analyst explains: The reason for the monetary policy stability is inflation related. Inflation is stable at the target, so there is no need for the ECB to act. The economic growth is possibly sliding lower as the business surveys report the lowest level of the economic activity in the last 2 years, but that might be easily blamed on Trump’s induced trade uncertainty that is particularly concerning Germany, the Eurozone’s largest economy.
How could it affect EUR/USD?
Though changes to the ECB's policy guidance are unlikely at this meeting, deteriorating macroeconomic backdrop since the September meeting could lead a dovish tone during the press conference and prompt some fresh weakness around the shared currency.
Ahead of today's key event risk, the pair has managed to recover a bit from over two-month lows, set in the previous session, and is holding comfortably above the 1.1400 handle. Further gains, however, looks limited and as FXStreet's own Analyst Yohay Elam writes: The EUR/USD is trading below the 50 and 200 Simple Moving Averages on the four-hour chart. Also, Momentum is leaning lower, and the Relative Strength Index is not reflecting oversold conditions. All in all, the picture is bearish. The recent stability looks like a "dead cat bounce" pattern.
Key Notes:
• ECB Preview: Draghi set to play risks down and keep the path of QE ending in December clear
• EUR/USD recovery looks limited ahead of the ECB – Confluence Detector
• EUR/USD Technical Analysis: Bearish view unchanged. Doors open for a visit to YTD low at 1.1299
About the ECB interest rate decision
ECB Interest Rate Decision is announced by the European Central Bank. Usually, if the ECB is hawkish about the inflationary outlook of the economy and raises the interest rates it is positive, or bullish, for the EUR. Likewise, if the ECB has a dovish view on the European economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.
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
EUR/USD treads water just above 1.0400 post-US data
Another sign of the good health of the US economy came in response to firm flash US Manufacturing and Services PMIs, which in turn reinforced further the already strong performance of the US Dollar, relegating EUR/USD to the 1.0400 neighbourhood on Friday.
GBP/USD remains depressed near 1.2520 on stronger Dollar
Poor results from the UK docket kept the British pound on the back foot on Thursday, hovering around the low-1.2500s in a context of generalized weakness in the risk-linked galaxy vs. another outstanding day in the Greenback.
Gold keeps the bid bias unchanged near $2,700
Persistent safe haven demand continues to prop up the march north in Gold prices so far on Friday, hitting new two-week tops past the key $2,700 mark per troy ounce despite extra strength in the Greenback and mixed US yields.
Geopolitics back on the radar
Rising tensions between Russia and Ukraine caused renewed unease in the markets this week. Putin signed an amendment to Russian nuclear doctrine, which allows Russia to use nuclear weapons for retaliating against strikes carried out with conventional weapons.
Eurozone PMI sounds the alarm about growth once more
The composite PMI dropped from 50 to 48.1, once more stressing growth concerns for the eurozone. Hard data has actually come in better than expected recently – so ahead of the December meeting, the ECB has to figure out whether this is the PMI crying wolf or whether it should take this signal seriously. We think it’s the latter.
Best Forex Brokers with Low Spreads
VERIFIED Low spreads are crucial for reducing trading costs. Explore top Forex brokers offering competitive spreads and high leverage. Compare options for EUR/USD, GBP/USD, USD/JPY, and Gold.