EUR/USD might see a mini-rally to the 1.0520-1.0550 mark – ING

The European Central Bank's Governing Council has announced it will hold an ad-hoc meeting today “to discuss current market conditions”. EUR/USD could stage a mini-rally to the 1.0520/50 area if the ECB steps with some reassurance for Italian bonds, economists at ING report.

ECB stepping in on fragmentation?

“The move to call an ad-hoc meeting appears to be in contrast with what we heard from Isabel Schnabel yesterday, who appeared to see no urgency to pre-announce any measure to reduce bond-market fragmentation.”

“Markets will now await some ECB headlines sometime today, and all this should make the long list of ECB speakers even more interesting to watch. The main speech will come from Christine Lagarde this afternoon, but we’ll also hear from three hawks this morning – Robert Holtzmann, Joachim Nagel and Georg Muller – and another one – Klaas Knot, later in the day. On the more dovish front, we’ll hear from Pablo Hernández De Cos, Fabio Panetta and Mario Centeno.”

“There are some risks of a small correction in the dollar today, and if this combines ECB steps with some reassurance for Italian bonds, we might see a mini-rally in EUR/USD today to the 1.0520-1.0550 mark. However, as we see any dollar correction as short-lived, our base case remains a return to sub-1.05 levels in the coming days.”