Forex - ECB to Highlight the Exit Path

There is an active controversy currently in the Forex market regarding the ECB exit path from its easy monetary policy. It seems that the market priced in the first rate hike at the end of 2019, but today’s ECB press conference may reveal an earlier hike. If that’s the case, the EURUSD will blow the 1.18 level.
The funny thing is that the EURUSD kept a tight range in the last six weeks since the last ECB press conference. It was then when Draghi announced the timing of the first rate hike, but he also left a bit of a mystery surrounding the decision.
As such, the Euro didn’t go anywhere all this time. The EURUSD traded in a close range for the past six weeks, EURJPY flirts with the all-important 130 level, and EURGBP goes nowhere, despite the ongoing Brexit uncertainties.
Exactly six years ago, Draghi held the famous “whatever it takes” speech, vowing to protect the Euro, no matter what. The markets believed him, and the trust in the Eurozone was re-established.
Fast-forward to today’s Eurozone reality, the economic transformation under Draghi’s supervision is remarkable. The unemployment rate shrank to pre-crisis levels, Ireland, Portugal and Spain enjoy healthy economic growth, and even Greece seemed to have surpassed the difficult times. With inflation harbored to the target, Draghi’s job at the helm of the ECB appears to be completed.
Today’s focus will be, yet again, on the guidance on interest rates. But even with a rate hike in 2019 (summer or winter), the ECB can’t shrink the interest rate differential with the main rival, the United States.
Trade wars and ongoing negotiations with the Trump’s Administration may spur risk-off moves for a short while, but in the end, the interest rate differential will prevail.
Will Draghi go down in history as the first ECB President that never hiked the interest rates in his mandate? Probably so, but his legacy remains, as Eurozone economies perform better than at the start of Draghi’s mandate.