EUR/USD Price Forecast – ECB MPC Update To Provide Short Term Directional Cues

EURUSD pair is trading range bound near overnight highs as investors have held back from placing major bets ahead of today’s European Central Bank Monetary Policy Committee update. Despite risk-averse trading activity in the broad market which supported USD bulls across the day, decline in 10—year US Treasury bonds caused a sharp fall in US Dollar’s value in the broad market giving EURO bulls the trigger needed to rebound from 2½  week lows and head towards 1.14 handle. While overnight price action saw bulls climb as high as 1.1392 handle, cautious investor sentiment ahead of today’s ECB meeting resulted in a decline from overnight highs to the upper half of 1.137 handle in Asian market hours.

Preliminary PMI’s To Keep Volatility High in Today’s Price Action

Given recent dovish macro data, investors are expected to have already priced in possible dovish comments during today’s ECB press conference when key members could reiterate ECB President Draghi’s dovish sentiments from earlier this month. ECB is unlikely to change interest rate during today’s meet however given IMF’s growth forecast from earlier this week and millions of dollars’ worth loss suffered in major economies owing to internal political conflicts and international trade wars, ECB is likely to provide their stance and outlook on key economies in the Euro area such as Germany, France, and Italy and their expectations on economic activity for 2019.

While investors have already priced in a delay of interest rate hike to the fourth quarter of 2019, any comments from ECB members or President Draghi which could suggest a delay of rate hike to 2020’s will bring EURUSD pair back near weekly lows of 1.134 handle. As of writing this article, EURUSD pair is trading flat at 1.1378 down by 0.01% on the day. On the release front, aside from ECB interest rate update, investors are expected to focus on Preliminary Manufacturing & Services PMI data from German and US markets which could provide short term profit opportunities. Any comments from ECB members which downplays economic slowdown in the Euro area will act as a trigger to push EURO above 1.14 handle and sustain the positive rally for rest of this week’s trading session.