Today, all market attention is focused on the European currency, which is quite logical given the saturated fundamental background in the Eurozone. At 14:45 Moscow time, the ECB will hold a meeting during which the European regulator will revise interest rates, and 45 minutes after this, a press conference will be held by ECB Chairman Christine Lagarde.
It is worth noting that market participants themselves do not expect surprises from decisions on rates, they are likely to remain at the same levels with a 99% probability, but ECB comments may well become a source of increased volatility. At her last press conference, ECB President Christine Lagarde noted that the bond purchase program is the bank’s preferred policy, but the regulator is ready to do more to support the Eurozone economy. At today's meeting, the European Central Bank is expected to announce the expansion of the quantitative easing program to mitigate the effects of the public health crisis caused by the coronavirus pandemic. Recall that economic support from the ECB was more modest compared to the efforts of the US Federal Reserve, launched an unlimited quantitative easing program and credit line for $ 2.3 trillion. US dollars. Together, the US government and the Federal Reserve together invested more than $ 6 trillion in the economy. in order to stimulate and directly support individuals, businesses and local governments.
In addition to expanding QE, the European Central Bank may resort to other measures to further stimulate the economy, for example, announce its intention to buy debt obligations, the ratings of which have recently been lowered to “junk” ones. Among such unreliable borrowers, literally from yesterday, Italy is listed. As a result of the pandemic in Italy, the largest mortality in the Eurozone was recorded. The country's national debt of 134.8% of GDP in 2019 was already the highest in the EU, and now government spending has grown even more.
Given the high likelihood of additional incentives from the ECB, the European currency runs the risk of ending today with a decline. Such expectations are due not only to the effect that the quantitative easing program may have on inflation, but also to the simple assumption that, in the doldrums, Eurozone industries will be much easier to recover at a lower exchange rate of the national currency.
EURUSD SellStop 1.0840 TP 1, 0710 SL 1,0890
Analytical reviews and comments on them reflect the subjective opinion of the authors and are not a recommendation for trading. Posted by Artem Deev Trader Analyst at AMarkets. The social network of forex traders is not responsible for possible losses in case of using review materials