What to expect from ECB today

The ECB is likely to increase its growth forecast next year against the backdrop of good economic data coming from the eurozone. At the last meeting, Draghi revealed the big road map for the ECB in 2018. and today will most likely talk about a revision of the prospects for the eurozone.

The traders will closely follow Mario Draghi speech and look for signs of a possible change of QE and interest rates in 2018. On the other hand, market analysts expect that good economic data coming from the eurozone will cause the ECB to rethink its plans and cut QE earlier than expected.

At today's meeting, we expect Mario Draghi to reaffirm his position on interest rates, namely to remain low even after the end of QE and the stabilization of inflation. With regard to inflation, Draghi will leave the ECB the opportunity to extend QE until it rises to the desired 2%.

How will all this affect the EUR?
The probability of raising interest rates is only 3.4%, which means it is almost certain that the ECB will not take action. In view of this, we expect, following the announcement of interest rates, an increased volatility without a sudden change in the value of EUR. As everyone expects, traders and investors will focus on Mario Draghi's statement after interest rates, and any changes in QE, interest rates or eurozone growth, we expect sharp movements in EUR.

Source: Bloomberg Pro Terminal

Jr Trader Petar Milanov

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