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EURUSD Long In Good Shape Ahead Of ECB Decision

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EURUSD Long In Good Shape Ahead Of ECB Decision

The ECB Governing Council meeting is scheduled for today. The new set of macroeconomic projections can reveal, for the first time, the ECB’s assessment of the Brexit impact on the Eurozone economy, though Draghi might want to be on the safe side and stress the preliminary nature of the estimates furthermore as higher-than-usual uncertainty surrounding the numbers. Given the commonly smart resilience of survey indicators after the united kingdom referendum, we only expect slight downward revisions to the growth outlook with most of the hit felt next year, with the gross domestic product forecast down towards 1.5% from 1.7%. The softer growth trajectory implies a bias for a marginally weaker CPI path, in the main for core costs, however we doubt that any revision can exceed a decimal per year. Moreover, oil prices have recovered some ground after the closing date of middle August and therefore the Governing Council may try to factor this into its broader assessment. Overall, we expect that the new projections are unlikely to be a clear trigger for the announcement of recent stimulus today. different factors argue against immediate action. First, there ar some important risk events scheduled in the fourth quarter 2016, specifically the Italian referendum and therefore the United States election. although we expect none of those events to materially damage the macro and financial outlook, the ECB may find it wise to keep some powder dry. Second, there are still six months to go before the end of QE and a decent dose of stimulus from previously announced measures is still in the pipeline. Third, the ECB isn’t willing to create it any harder for the Fed to normalize its financial policy. If the EUR were to resume a depreciating trend in response to immediate ECB easing, the FOMC might need second thoughts about the timing of its next rate hike, with obvious consequences for the USD and, maybe, also for investors’ mood. this is often a risk the ECB doesn’t want to take. In our opinion the bar for a further step-up in the monthly pace of purchase appears to be fairly high, mainly due to the intensification of deficiency issues that {this would|this is able to|this may|this might|this could} cause and therefore the thorny countermeasures the ECB may have to take. we remain convinced there’ll be no change to policy rates, as the side effects of an even more negative deposit rate would outweigh the advantages. No action today is likely to support the EUR/USD. we stay long and raised the target to 1.1390 on our short position.

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Source: GrowthAces.com – Daily Forex Signals

Thinking from a different angel: EURUSD IN LONG POSITION ABCD PATTERN

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Mohammad Riad

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