The European Central Bank is likely to stop making any statements about its stimulus program, including Thursday's sessions this week. Instead, Mario Draghi will focus on the strong euro.
Many investors believe that a stronger euro could postpone the decline in QE and tomorrow we will not hear a clear signal from the ECB about shrinking, and the main concerns are that the strong currency will slow the recovery in the eurozone and weaken the inflation outlook. On Thursday, the ECB will also publish growth and inflation forecasts in its report, with many market participants believing that we will see weaker expectations on the part of the bank, which will put pressure on the euro.
Between the last two sessions the euro rose by 4.2%, which means that the inflation forecast in 2018 can be adjusted by 0.2% to 1.1%, well ahead of the desired 2%.
The future of the euro is in the hands of President Draghi and investors will watch very briefly how he will explain why he intends to shrink the incentives once the economic data is still weak.
Source: Bloomberg Pro Terminal
Jr Trader Petar Milanov
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