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Forex Flash: EUR/USD may rise on ECB message – TD Securities

All eyes will be pointed at the ECB rate decision and President Draghi’s press conference later today, with a slim chance for a complacent EUR/USD during the Q&A. “With no specific comments on the euro (our expectation) will be taken as a complacent attitude against the strong currency (EUR/USD up), while we see only a 25% chance Draghi tries to mildly manage the pace of EUR appreciation and only a 2% chance he does something as drastic as suggest the moves have been “brutal,” which could potentially take EUR/USD a big figure lower to 1.3450”, wrote analyst Cristian Maggio, seeing scope for bidirectional moves.

During the European morning, both Spanish and French auctions hit the top range of their respective targets: “Spain sold €4.61bn of bonos maturing in 2015, 2018 and 2029 (vs. the €4.5bn target), with bid-to-cover ratio ranging 2.02-2.24, while France sold a total of €7.98bn of bonds maturating in 2020, 2022 and 2027 (vs. €8.0bn targeted)”, said Maggio, pointing also to the small negative revisions to the German IP, that came in pretty much in line with expectations at 0.3% M/M in December (cons 0.2% prior –0.2%).

“Some in the market have suggested they could jawbone the currency, but we think the ECB message on both euro and liquidity withdrawal will be positive and support euro and rates higher”, wrote the TD Securities analyst, not expecting much market movement from the two-day EU Leaders Summit wrap up.

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