Today’s meeting of the European Central Bank is considered to be the most important event this week's macroeconomic calendar includes. Market participants hope to receive some clues about the future of its monetary policy.
Against this background, the euro began to advance shortly after the opening of the US trading session. However, these hopes will most likely be dashed. The latest Fed’s decision to raise interest rates from the middle of next year triggered a rise in the US dollar.
Thus, only similar statements by the ECB could hinder this rally. However, the inflation rate in Europe has recently declined. Although there is every indication that this slowdown is temporary, consumer prices are expected to continue rising. Therefore, the ECB still has time to take appropriate measures. Unlike the United States, Europe is still reeling from recession. In such a situation, even a hint of higher interest rates could lead to unfortunate consequences.
The European economy is not ready for a tightening of monetary policy. Moreover, a decline in inflation will be just an occasion for the regulator to keep its monetary policy unchanged. As for the dollar, it is likely to keep gaining in value.
Refinancing rate (Europe):
In addition to Christine Lagarde's speech, today’s macroeconomic calendar includes statistics on jobless claims from the United States. However, market participants will hardly pay great attention to this data.
Thus, initial claims for state unemployment benefits are anticipated to decrease by 20,000, and continuing ones - by 121,000. This means that the US labor market continues to recover which, in turn, points to steady US economic growth.
Continuing jobless claims (United States):
Yesterday, amid subdued trading activity, the euro/dollar pair pulled back slightly towards the previously passed level of 1.1800.
The market dynamics turned from an acceleration phase to a slowdown, albeit temporary.
Currently, the price is standing still near the 1.1800 mark, probably accumulating trading volumes.
The final meeting of the ECB and the subsequent press conference may spark renewed speculative interest among market participants. If the price breaks through the level of 1.1750, it will be possible to go short. Long positions can be considered if the price consolidates above 1.1830.
Сomprehensive indicator analysis shows that technical tools on the minute and hourly charts generate a variable signal, while the daily trading chart continues to indicate a downward trend.
InstaForex Group