22 Jan 2015
EUR/USD holds above 1.1600, all eyes on the ECB
FXStreet (Córdoba) - EUR/USD inched a tad higher and it heads into the ECB decision trading above 1.1600, with investors adopting a wait-and-see mode amid great expectations the bank would announce a QE-type of program today.
Even though a quantitative easing seems largely priced in, with EUR/USD having lost more than 17% over the last months pressured by ECB/Fed divergent policy prospects, it remains to be seen if Draghi delivers. On Wednesday, media reports suggested the bank would propose €50 billion QE a month, which could at least attenuate the knee-jerk reaction.
EUR/USD is currently trading at the 1.1630 zone. The pair recovered from an 11-year low of 1.1459 struck last week on the back of SNB surprise move.
All eyes on the ECB
"All in, we see scope for significant volatility in the EUR intraday but we continue to feel that the ultimate drag from QE on the EUR is likely to prove considerable over the next few months, coming as it does just as the Fed is trying to move closer to policy normalization", said the TD Securities team. "Still, the market is carrying a significant short EUR position into the meeting and the urge to ‘buy the history’ having ‘sold the mystery’ may be strong, squeezing the EUR higher—if only very briefly".
"Whatever ever the market outcome today, we think the EUR is still likely to head decisively lower sooner rather than later", analysts added.
Even though a quantitative easing seems largely priced in, with EUR/USD having lost more than 17% over the last months pressured by ECB/Fed divergent policy prospects, it remains to be seen if Draghi delivers. On Wednesday, media reports suggested the bank would propose €50 billion QE a month, which could at least attenuate the knee-jerk reaction.
EUR/USD is currently trading at the 1.1630 zone. The pair recovered from an 11-year low of 1.1459 struck last week on the back of SNB surprise move.
All eyes on the ECB
"All in, we see scope for significant volatility in the EUR intraday but we continue to feel that the ultimate drag from QE on the EUR is likely to prove considerable over the next few months, coming as it does just as the Fed is trying to move closer to policy normalization", said the TD Securities team. "Still, the market is carrying a significant short EUR position into the meeting and the urge to ‘buy the history’ having ‘sold the mystery’ may be strong, squeezing the EUR higher—if only very briefly".
"Whatever ever the market outcome today, we think the EUR is still likely to head decisively lower sooner rather than later", analysts added.