Euro Talking Points
The European Central Bank (ECB) meeting on July 26 may do little to alter the near-term outlook for EUR/USD[1] as the Governing Council is widely expected to retain the current policy, and more of the same from President Mario Draghi & Co. may rattle the single-currency as the central bank remains in no rush to conclude its easing-cycle.
EUR/USD Forecast: Range to Persist on Wait-and-See ECB Policy
After unveiling fresh updates at the last meeting in June[2], the ECB may merely attempt to buy more time as the quantitative easing (QE) program is now set to expire in December. As a result, the ECB is likely to reiterate that ‘the Governing Council stands ready to adjust all of its instruments as appropriate to ensure that inflation continues to move towards the Governing Council’s inflation aim in a sustained manner,’ and the central bank may persistently tame expectations for an imminent rate-hike as officials expect borrowing costs to ‘remain at their present levels at least through the summer of 2019,’
It looks as though the ECB will stick to its dovish outlook even as the Federal Open Market Committee (FOMC)[3] embarks on its hiking-cycle, and the deviating paths for monetary policy may continue to present a bearish outlook for EUR/USD especially as Chairman Jerome Powell & Co. are widely anticipated to deliver another 25bp rate-hike in September.
However, the IG Client Sentiment report[4] warns of range-bound conditions for EUR/USD amid the recent back and forth in retail positioning, with 53.7% of traders now net-long EUR/USD as the ratio of traders long to short stands
