When is the European Central Bank (ECB) rate decision and how could it affect EUR/USD? By HareshMenghani ECB Inflation Ukraine EURUSD Currencies
eeting press conference at 12:30 GMT. The ECB has been lagging behind other major central banks in the process of policy normalisation and is facing a policy dilemma over record-high inflation amid concerns about the economic fallout from the Ukraine crisis. This might force the ECB to maintain maximum flexibility and adopt a wait-and-see approach.
According to analysts at ING: “Staying put and continuing with the announced reduction of net asset purchases looks like the only viable option for now. However, given the latest market pricing of future ECB rate hikes and unclarity about the ECB’s exact reaction function in these times of high uncertainty, ECB President Christine Lagarde could be forced to somewhat limit the ECB’s optionality to a few options.
As Eren Sengezer, Editor at FXStreet, explains: “The ECB is likely to respond to the euro’s weakness, aggressive tightening prospects of major central banks and hot inflation inarea by turning hawkish in April. For EUR/USD to stage a steady rebound, however, the bank may have to convince markets that they are preparing to hike the policy rate by June.”
Eren also outlined important technical levels to trade the major: “1.0950 aligns as the first resistance. In case this level turns into support, the pair could target 1.1000 and 1.1040 .Key Notes
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