It will be a busy day for the EUR/USD today ahead of the ECB decision and statement. Most of the big option expiries which we mentioned earlier this week kept the pair stuck within 70/80 pips of the main expiry level at 1.2500. Most of the bigger options have now rolled off, allowing plenty of scope for intraday movements.
The speculative market is short and bearish on the EUR and they are hoping for another dovish ECB statement. The benchmark rate will stay at 0.05% and the deposit rate at -0.2%, but it’s the policy statement which the market will be eyeing with keen interest.
A dovish statement might convince some of the big reserve managers to dump on the EUR whereas a more neutral commentary will likely lead to short covering, especially on the crosses.
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