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The euro had been stubbornly rising throughout the past few days even in the face of lower inflation and GDP data, but yesterday for the first time this week it showed signs of vulnerability.

Update:  ECB leaves all rates unchanged again – EUR/USD bounces back up

Update:  Live blog of the ECB press conference.

Despite Mario Draghi making it perfectly clear that he believes inflation will pick up, the consensus remains that even if monetary easing of some sort is not announced today, it will come in the next few months. As a minimum many investors are looking for at least something from the ECB today, even if it’s nothing more than a line in the sand, a condition of some sort that has to be met before easing can occur or to give it its more fashionable term – forward guidance. Either way the back drop of the euro looks to be a currency that has limited upside, especially against the dollar. One continues to suffer from deflationary pressures, the other is seeing a gradual withdrawal of stimulus. This morning EURUSD is trading at 1.3765 so bears will be watching closely for a test of 1.3740 and then 1.3700 in the near-term.

Away from the euro we’ve seen the dollar on the whole slowly but surely reasserting itself, especially against the yen as USDJPY breached the 104.00 level overnight. This is a major near-term resistance level so we may see the pair pause for breath at this new two month high ahead of tomorrow’s nonfarm payroll.

It’s not all about the ECB however as this morning sees all the European and UK services PMI surveys which can cause movements in FX markets and then later this afternoon the ISM non-manufacturing from the US gives us a picture from across the pond.

Further reading:

ECB decision cheat sheet – 4 scenarios

UK services PMI disappoints with 57.6 – GBP/USD falls below support