Should the European Central Bank meet expectations, its actions are likely to fuel risk-taking, and bullish EUR/USD traders will probably respond by driving an already-elevated currency pair even higher.
The ECB is expected to extend its Pandemic Emergency Purchase Programme and its Asset Purchase Programme on Thursday, policies that have been supporting risk this year without hurting the euro.
A stronger euro lessens any boost that extending asset buys might have for inflation, so it's not something the ECB wants, but policies that might affect the euro such as rate cuts or intervention are not expected.
Either would utterly shock currency traders, but it's the expected outcome that traders should prepare for and that is a result that should bolster risk appetite.
If so, EUR/USD, which has recently broken to 2020 highs and has consolidated that move near the high, is likely to extend the rally.
Stimulus will probably boost longs to record levels and EUR/USD to 1.25-1.26.
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