EUR/USD has recovered from today's near-two-month low of 1.1125 that it struck on disappointing euro zone nL8N24P274 and German nL9N1JU00E data, but the consistently weak economic results from Europe suggest lower levels may in store as markets increase betting on an ECB rate cut.
Though odds for a 10bp ECB cut on Thursday hover around 50%, analysts at Commerzbank eye a 20bp cut.
Morgan Stanley, among others, forecast -10bp CBP.
ECBWATCH on Eikon indicates 28bps worth of easing by Dec 2020.
The recent drop in the Euribor futures roll also suggests that even if the upcoming ECB easing cycle is brief, rates will remain lower for longer 0#FEI:.
For EUR/USD a steady ECB on Thursday should keep the pair from making a new 2019 low below 1.1105.
However, any dovish lean by the ECB seen as providing enhanced accommodation should send EUR/USD through that level, putting the May 16 2017 low of 1.0973 and the April 24 2017 low of 1.0821 in focus.
Still, with most central banks, including the Fed, embracing accommodation FEDWATCH, EUR/USD weakness may be limited to a lower trading range rather than significant fall.
EUR Chart: Click here