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Sep 06 - 07:55 AM

EUR/USD - COMMENT-EUR/USD Should Drop After This Week's ECB Meeting

By Jeremy Boulton  —  Sep 06 - 07:10 AM

Although EUR/USD usually stabilizes around the time of European Central Bank meetings and sometimes bounces slightly, drops soon follows and another fall is likely after this week's meeting.

At the ECB's March 10 meeting EUR/USD traded to 1.1121 but only reached 1.1185 afterwards, before dropping to 1.0758 on the day of the April 14 ECB meeting.

The bounce after the April meeting reached 1.0936 on April 21 before the pair slumped to 1.0349 in May.

At that point expectations regarding ECB action surged, driving a rally to 1.0787 but the central bank disappointed resulting in a sharp sell-off below parity before July's hike.

EUR/USD, which had risen to 1.0273 before the ECB pulled the trigger for the first time in a decade and raised rates on July 21, only reached 1.0369 after, before tumbling to 0.9876 before this week's decision.

The technical downtrend is supported by a big interest rate divide as well as high energy prices, which undermine the import-reliant euro zone but favour exporters like the United States.

Despite an extremely negative backdrop traders have been reluctant to sell EUR/USD and remain reluctant sellers.
Without the restraint of bearish bets EUR/USD may reach 0.9485 before the ECB meets again on Oct.
27.

For more click on FXBUZ


Source:
Refinitiv IFR Research/Market Commentary

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