Global macro overview for 08/06/2017:
The European Central Bank interest rate decision and press conference is one of the most important events of the day. The Interest Rate Decision is scheduled for release at 11:45 am GMT and the Press Conference is scheduled at 12:30 pm GMT. Market participants expect ECB to leave the interest rate unchanged at the level of 0.00%, together with Deposit Facility Rate (-0.40%) and Marginal Lending Facility (0.25%). The ECB will also present quarterly projections of inflation and gross domestic product. The global investors will pay attention to the press conference, where the focus will be on the normalization of the ultra-loose monetary policy of the bank. The first step in this direction may be to raise the assessment of the risk balance for growth in the Eurozone or to change the wording of forward guidance (long-term monetary policy communication).The market speculates that the ECB will decide to raise the assessment of the risk balance for Eurozone economic growth rate from "negative but improving" to neutral rate today. This would heavily impact the Euro-related currency pairs across the board, resulting in an appreciation of the Euro.
Let's now take a look at the EUR/USD technical picture on the H4 time frame. The market is trading in a relatively narrow range ahead of the ECB event. The upside is being capped by the level of 1.1284 and the downside is being supported by the level of 1.1201. The overall market conditions are overbought and the momentum indicator is pointing to the downside for now.
