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Will Improved ECB Forecasts be Enough for the Euro?

Will Improved ECB Forecasts be Enough for the Euro?

2016-06-02 11:15:00
Christopher Vecchio, CFA, Senior Strategist
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Talking Points:

- EUR/USD rebounding off of channel support from December.

- ECB press conference carries additional weight today.

- Higher volatility in FX markets should have implications for your trading strategies.

Markets aren't expecting out of the European Central Bank this morning, with a 0% chance of a rate cut being priced in by EONIA forward rates as well as overnight index swaps. Accordingly, that means that all focus for the Euro will be on President Mario Draghi's press conference, where the updated staff economic projections (SEPs) and Draghi's optimism (or lack thereof) could prove to be a bullish catalyst for the single currency.

Similarly, It goes without saying that, as one of the world's most important central banks, the ECB today could push along the rally in higher yielding currencies and risk-correlated assets just as easily as it could derail it. With Brexit fears starting to rise, it seems very likely that Draghi & co. will take a cautious tone - but those looking for evidence that the ECB is ready to ease again in the near-future are bound to be disappointed.

See the above video for technical considerations in EUR/USD, AUD/USD, USD/JPY, EUR/USD, and the USDOLLAR Index.

Read more: USD/JPY Slips Back as Abenomics’ Failings Come to Light

If you haven't yet, read the Q2'16 Euro Forecast, "EUR/USD Stuck in No-Man’s Land Headed into Q2’16; Don’t Discount ’Brexit’," as well as the rest of all of DailyFX's Q2'16 quarterly forecasts.

--- Written by Christopher Vecchio, Currency Strategist

To contact Christopher Vecchio, e-mail cvecchio@dailyfx.com

Follow him on Twitter at @CVecchioFX

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