Today, the focus of the market is the final ECB monetary policy decision. It is expected that the European regulator will not change its monetary course.
By its next meeting, the European Bank came up with a long-standing problem and the roots of which are growing from the crisis of 2008-09. Recent events in Italy related to its growing debt problems indicate that the crisis in the eurozone has not disappeared. They were camouflaged by incentives and credit programs of the country, and nothing more. A similar problem is also noted in Greece. We have previously indicated this, and although it is also being tried to be neutralized by lending, it implicitly exists and can also reappear at any time.
So far, the eurocurrency is generally kept in the range relative to the US dollar, but it seems to us that there is a too obvious discrepancy in monetary policies between the ECB and the Fed. We recall that the former is only going to stop stimulating the economies of the region, and the latter is already actively pursuing the cost tightening borrowing and reducing your balance will not be in favor of the single currency. And although it is more preferable for investors to invest in an asset that has promising growth, and the euro is now perceived by a number of market players as such, their hopes may fall. And here, the debt problem of Italy and, in general, the very cautious position of the European regulator can play its role.
We believe that following the meeting of the bank its monetary course will not be changed, however, in its resolution, as well as the content of the speech of the ECB President M. Draghi may contain optimistic notes. But, in our opinion, both Draghi and the bank as a whole may be concerned not only with the debt problems of some eurozone members, but with the prospects for the global economy, which are clearly deteriorating against the backdrop of trade wars and escalating geopolitical confrontation between Russia, China on the one hand, and United States and the consolidated West, on the other. Given this, we believe that the euro is unlikely to receive significant support from the meeting. Most likely, its further local decline paired with the dollar will continue after a slight upward rollback in the wake of volatility.
Forecast of the day:
The EUR / USD currency pair is trading above the level of 1.1380, trying to consolidate above the level of 1.1400. The pair may, following the meeting and press conference of M. Draghi, recover to 1.1450. Despite this, we believe that it should be sold on the rise from this mark or after its decrease below the level of 1.1380 with the local goal of 1.1300.
The GBP / USD currency pair is trading above the level of 1.2875. It may also pull up following the eurodollar up, but we consider it necessary to sell it from 1.2930 or after its decline below 1.2875 with the target of 1.2800.
