ECB Preview: Focus On Strategic Review
Fiona Cincotta January 22, 2020 11:13 AM
Thursday 23rd January
- No change to policy expected
- Learning to read Christine Lagarde
- Strategic review
The ECB ae not expected to alter monetary policy. Data since the December meeting are pointing to the slowdown in the eurozone economy bottoming out. However, there is still no sign of a rebound in the manufacturing sector. Concerns also exist that the slowdown in the manufacturing sector could still spill over into the labour market. Inflation is showing some signs of picking up, which will offer some reassurance to the ECB. However, inflation at 1.3% it may be at the joint highest level since March last year, but it is still significantly short of the central bank’s 2% target.
Reading Christine Lagarde
This all means that we aren’t expecting any fireworks from the ECB regarding monetary policy. A continuation of wait and see and an opportunity to learn to how to read Christine Lagarde who has just three months in office.
Perhaps of more interest and the highlight of this month’s meeting will be the kicking off of the strategic review. The scope and parameters for the review need to be set and could garner most attention. Going forwards (the review could take a year) the definition of price stability and how to reach it will almost certainly be the most important part of the review. We could eventually see a new definition for the “around 2% target”, possibly changing to a more flexible range.
EUR/USD levels to watch
EUR/USD is holding steady at the time of writing and remains below $1.11. The pair is also below its 50,100 and 200 sma on 4 hour chart, a bearish sign.
Sustained weakness below $1.1065 could confirm EUR/USD’s bearish bias, setting the stage for further declines towards $1.1050 and towards the key psychological $1.10 level.
A move above $1.1095 should bring resistance at $1.1110 and $1.1120 into play. A move above $1.1175 could negate the current bearish bias.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.