News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
Wall Street
Bearish
Low
High
of clients are net long.
of clients are net short.
Long Short

Note: Low and High figures are for the trading day.

Data provided by
More View more
Real Time News
  • The S&P 500 have taken a clear dive to start the week and fear of full risk aversion is gaining traction. DailyFX's @JohnKicklighter discusses what to expect in the markets this week! https://t.co/Mlyp5Tbdax
  • $USD still pulling back from resistance. 93.43 was the Q1 swing high, still playing a role in $DXY support potential around prior res, ~93.20 https://t.co/3TnlEu0yZX https://t.co/ub8o4D8NhW
  • despite the theatrics elsewhere, $Gold has held last week's low through this week's open, at least so far even getting a bump higher. resistance potential 1769-1775 $GC $GLD https://t.co/4mbBa8Yzhu
  • While there is no doubt a risk aversion wave at play now, it can still burn itself out with years of complacency and the expectations of Fed on Wed (anticipation can take the wind out of sails). But if/when the Dollar takes off pre-FOMC, that would be. https://t.co/3qFNBQEEA3
  • Bitcoin probing Fibo support zone ~42,588 #Bitcoin $BTCUSD https://t.co/f5XeSk5VDY https://t.co/zKDRps62Id
  • EUR/USD extends the series of lower highs and lows from the previous week as European Central Bank (ECB) officials defend the dovish forward guidance for monetary policy. Get your $EURUSD market update from @DavidJSong here:https://t.co/4dgXe9lMik https://t.co/5CkSsQKawh
  • There are reasonable disputes over where technical boundaries exist from people with different views, charts, time frames, etc. I think this $SPX gap down and drive below the 50-day SMA clearly qualifies as a break https://t.co/M15HsOyvoG
  • Some people like a quiet market that edges higher consistently day in and day out. I am not one of those people. I like volatility
  • 🇺🇸 NAHB Housing Market Index (SEP) Actual: 76 Expected: 74 Previous: 75 https://www.dailyfx.com/economic-calendar#2021-09-20
  • The Fed has a rate decision on Wednesday which means that they’re in a blackout period now, preventing the possibility of Fed-speak to perk markets up until we hear the rate decision later this week. Get your market update from @JStanleyFX here:https://t.co/bYjo3Blq51 https://t.co/F51NbRoIOi
ECB Preview & Euro Forecast: Will Lagarde Respond to COVID-19?

ECB Preview & Euro Forecast: Will Lagarde Respond to COVID-19?

Rich Dvorak, Analyst

ECB MEETING PREVIEW & EURO FORECAST: CORONAVIRUS CONCERS MOUNT, COULD FORCE CHRISTINE LAGARDE TO JUICE EUROZONE ECONOMY WITH MONETARY STIMULUS

  • The European Central Bank, or ECB, is on tap to provide markets with its latest monetary policy update this Thursday, March 12 at 12:45 GMT and leaves the Euro at risk
  • ECB likely to follow suit of other central banks shoring up a faltering global economy as the novel coronavirus outbreak accelerates into a full-blown pandemic
  • Crashing Eurozone inflation expectations could force the hand of the ECB Governing Council, led by Christine Lagarde, to provide stimulus and lower key interest rates for the euro area

ECB President Christine Lagarde is set to face her first true test as head of the European Central Bank. Lagarde assumed her role late last year from former ECB President Mario Draghi, who steered the Eurozone economy through the global financial crisis, and infamously stated that the ECB will do “whatever it takes to preserve the Euro.”

Now, it appears that the ECB and its Governing Council will be forced to weather another economic storm ignited by the novel coronavirus outbreak (COVID-19). The accelerating coronavirus pandemic has infected Italy – the world’s eighth largest economy and third biggest contributor to total EU GDP – at an exponential rate recently and has triggered a countrywide quarantine.

That said, amid the growing coronavirus pandemic that is plaguing an already weak Euro economy, will Lagarde carry the torch of her predecessor and communicate willingness to do ‘whatever it takes’ at the upcoming ECB meeting announcement due Thursday, March 12 at 12:45 GMT?

Or, in light of limited monetary policy capacity, will the European Central Bank defer to EU governments to stunt economic fallout stemming from the spread of COVID-19?

EUROPEAN CENTRAL BANK FACES PLUNGING EUROZONE INFLATION EXPECTATIONS

Euro chart Eurozone inflation might promt ECB response to coronavirus outbreak

The governing mandate of the ECB and its main objective for the Euro-system is to maintain price stability while seeking full employment and balanced economic growth. On that note, and in consideration of cratering Euro-area inflation expectations and mounting downside risks faced by the Eurozone economy, ECB President Christine Lagarde and the Governing Council could be encouraged to ramp up monetary policy stimulus efforts.

ECB MEETING MIGHT REVEAL ACCELERATION IN ASSET PURCHASES, MORE TLTRO MEASURES

ECB Balance Sheet Chart European Central Bank Total Assets

One possibility could be for the ECB to ramp up its asset-purchase program or double down on TLTROs. Currently, the European Central Bank has QE-infinity on autopilot “for as long as necessary” at a rate of EUR20 billion per month.An interest rate cut to the ECB deposit facility rate might be another option, but capacity for ECB rate cuts is quite limited considering the benchmark policy rate already sits at a record low -0.5%.

However, central banks around the world – including the ECB – have increasingly called upon sovereign governments with fiscal capacity to start shouldering some of the stimulus burden. As such, a great deal of uncertainty lingers around the upcoming ECB meeting and interest rate decision. A big question mark also hangs over how the ECB central forecast will change to reflect the Governing Council’s updated expectations for the Eurozone economy.

EUR PRICE OUTLOOK – EURO AT RISK AHEAD OF MARCH 2020 ECB MEETING

EURUSD Price Chart Euro at Risk Ahead of ECB Meeting

Euro price action consequently appears at risk of experiencing heightened currency volatility – particularly over the next 24-hours – as forex traders react to details out of the March 2020 ECB monetary policy update. This is also suggested by the latest EUR/USD overnight implied volatility measurement of 18.7%, which is the highest reading in nearly three years.

EUR/USD overnight implied volatility of 18.7% ranks in the top 99th percentile of measurements taken over the last 12-months and compares to an average reading of 7.9% over the last five years. This underscores the high degree of uncertainty, or risk, surrounding the Euro headed into Thursday’s trading session and ECB rate decision.

Euro Traders Beware: EUR Price Volatility & ECB Rate Decisions

EUR/USD PRICE CHART: 2-HOUR TIME FRAME (FEBRUARY 24 TO MARCH 11, 2020)

EURUSD Price Chart Euro Forecast ECB Meeting Preview

Chart created by @RichDvorakFX with TradingView

Nevertheless, the direction of spot EUR/USD price action could mirror the direction of interest rate differentials between yields on US and Eurozone sovereign debt. Since the coronavirus began wreaking havoc on financial markets late last month, spot EUR/USD prices have closely tracked the spread between ten-year US Treasury yields and an equally-weighted index of rates on comparable ten-year German, French and Italian bonds.

Keep Reading: ECB President Lagarde Warns of Risks to Financial Markets from Coronavirus Epidemic

-- Written by Rich Dvorak, Junior Analyst for DailyFX.com

Connect with @RichDvorakFX on Twitter for real-time market insight

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES