Mario Draghi and his colleagues meet in less than 24 hours in the first decision since announcing the big stimulus package. Will they try to talk down the euro? Or perhaps re-open the door to more cuts? And what’s next for the euro? Here is their view, courtesy of eFXnews: As EUR/USD skips towards 1.14, the fact that it’s doing so despite huge outflows of long-term capital and wholesale abandon of European bonds by foreigners, doesn’t really help. The Euro is going up despite the ECB. The yield-spread-based model of EUR/USD I’ve been using for just over a year now suggests that EUR/USD a ‘a bit’ high, but it also suggests it’s going in the right direction. My old ‘baby model’ based on vol, peripheral European spreads and 2-year rate differentials, is so out of touch it gets its own axis, but even so, it too points upwards. Relative rate and yield trends are trumping the balance of payments and the effects of QE/ECB. Back in December, when EUR/USD trade below 1.06 ahead of fed tightening, 10yearn Treasury yields were at 2.15% and the EU/US spread at 177bp. Today, those numbers are 1.78% and 160bp. A weaker Euro needs something in this mix to change. Finally, a bonus chart because the ECB also released the April Bank Lending Survey. This showed an that demand for home loans is expected to pick up, while demand for consumer loans remains steady and demand for loans to business is expected grow, but more slowly in the months ahead. The chart plots all that against the year-over-year GDP growth rate, and ‘steady as she goes’ seems to sum it up. The ECB isn’t about to change policy any time soon. This really won’t be the driver of Bund yields, anchored by the ECB, peripheral spreads (anchored by the ECB), or the Euro (supported by the Fed). For lots more FX trades from major banks, sign up to eFXplus By signing up to eFXplus via the link above, you are directly supporting Forex Crunch. Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Daily Look share Read Next USD recovery? – Live Market Open from 7:00 GMT Yohay Elam 6 years Mario Draghi and his colleagues meet in less than 24 hours in the first decision since announcing the big stimulus package. Will they try to talk down the euro? Or perhaps re-open the door to more cuts? And what's next for the euro? Here is their view, courtesy of eFXnews: As EUR/USD skips towards 1.14, the fact that it's doing so despite huge outflows of long-term capital and wholesale abandon of European bonds by foreigners, doesn't really help. The Euro is going up despite the ECB. The yield-spread-based model of EUR/USD I've been using for just over a year now… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.