It is all about the ECB today. The European Central Bank will occupy the main stage and all eyes will be on them. Although, it is widely expected that the bank isn’t going to bring anything out of ordinary. This means that the bank is expected to keep its monetary policy unchanged.
Market players are also expecting the bank to maintain its narrative on its monetary policy. The ECB’s president has recently played down the inflation concerns, and she believes that any possible surge in inflation is more likely to be transitory. Market players should not be concerned about interest rates going up any time soon.
However, there are some difficult questions that the bank will need to answer today such as what the bank thinks of the economic recovery which is taking place. Another important question that is likely to move the euro will be on the coronavirus vaccine. There is no doubt that Europe is getting better hold of the vaccine situation and more people are getting the vaccine shots. This means that economic recovery is likely to become better.
As for technical analysis, the EUR/USD had two brutal weeks of sell-off. This is mainly because of the strength in the dollar than anything else. On the daily time frame, the price is way oversold as it has pierced the lower line of the Bollinger Band and this means retracement is due soon.
