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EUR/USD: neutral bias – (1.2300-1.2650) – BTMU

FXStreet (Guatemala) - Lee Hardman, Currency Analyst at Bank of Tokyo-Mitsubishi UFJ explained that the euro remains more stable against the US dollar heading into year end.

Key Quotes:

EUR/USD has traded within a narrow range between1.2400 and 1.2600 during

“The key event risk in the week ahead will be the upcoming ECB policy meeting”.

“The ECB remains under pressure to deliver additional monetary easing as
downside risks to inflation are being reinforced by the sharp decline in the price of crude oil”.

“The ECB staff forecasts are expected to reveal modest downward revisions
to their inflation outlook, and more material downward revisions to the economic growth outlook to reflect the recent loss of momentum. Investors also remain sceptical that current planned measures will prove sufficient to meet the ECB’s balance sheet expansion target”.

“Recent rhetoric from the ECB has signalled that it is moving closer to adopting sovereign debt QE in the first quarter of next year”.

“The ECB may want more time to assess the impact of current easing measures before easing as soon as next week”.

“At the very least ECB President Draghi should provide a stronger signal that further easing could soon be forthcoming helping to limit any disappointment from a lack of policy action next week”.

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