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ECB monetary policy decision – Overview

Investors gear up for the upcoming European Central Bank (ECB) monetary policy decision, scheduled to be announced at 11:45 GMT and will be followed by the post-meeting press conference at 12:30 GMT. The central bank is widely expected to leave all policies unchanged. Markets have also largely priced out any further action this year and are pricing in some chance of only modest additional stimulus in 2020.  
Meanwhile, analysts at ABN AMRO have a different view and explained – “…we think that the ECB is too optimistic on the macro outlook as well as on the effects of its September stimulus package. As such, we maintain the view that the ECB will cut its deposit rate by 10bp in December of this year before stepping up the pace of net asset purchases at the March meeting (to EUR 40bn a month from April).”

How could it affect EUR/USD?

As Yohay Elam, Senior Analyst at FXStreet notes – “While the ECB is unlikely to change its policy, President Draghi’s defense of his legacy may move the euro. In his last meeting, he may stress the recent weaknesses, defend recent stimulus, and weigh on the euro. Other scenarios such as expressing optimism or satisfaction from government action may boost the common currency – but are highly unlikely.”
“Resistance awaits at the cycle high of 1.1180, recorded last week. Next, we find August’s stubborn cap of 1.1225, closely followed by 1.1250, also dating to the summer. 1.1305 is the next level to watch. Lower, 1.1105 is the weekly low. Next, we find 1.1060, which capped the pair two weeks ago. 1.10 and 1.0940 are next,” he added further.

Key Notes

ECB Preview: Draghi’s defense of his legacy may drag EUR/USD down
EUR/USD Forecast: Draghi may drag it down for the last time as German recession fears rise
EUR/USD Technical Analysis: A test of the 55-day SMA around 1.1050 stays on the table

About the ECB interest rate decision

ECB Interest Rate Decision is announced by the European Central Bank. Usually, if the ECB is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the EUR. Likewise, if the ECB has a dovish view on the European economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.