The euro found a compromise between $1.28 and $1.2850 so far this week, as traders have been largely sidelined ahead of today's (Thursday) big risk event in the form of the European Central Bank Monetary Policy announcement.
This week, while headlines out of Europe were less than met the eye for the interest of the shared currency, the exchange rate has managed to stabilize somewhat higher.
In between, some short-lived price shakes were observed on weaker PMIs in Europe, the resignation of Cyprus Finance Minister, Wednesday's soft ADP data and ISM Non-Manufacturing, Fed's members comments. These were all events within the context of secondary triggers, but not enough to move the pair from its semi-stagnation- a typical behavior ahead of the Central Bank decision.
"Markets expects the EU central bank to present a far more dovish stance than last month, when Cyprus was not part of the crisis history" says Valeria Bednarik, chief analyst at Fxstreet.com. Although a cut rate seems still out of question, a view agreed by Fxstreet.com contributors too.
Katarzyna Komorowska, fundamental expert at Fxstreet.com, presents various views from our contributors below:
"ECB Chairman Mario Draghi failed to give any hints of further easing at the last meeting, and I believe this to be telling," states Nicky Ong, Co-Founder of Traders Corner. He does suggest that the central bank may cut soon, but not yet in April.
Alistair Cotton, Senior Analyst at Currencies Direct, thinks that "the ECB will look to extend more liquidity to the banking system as a whole rather than cutting rates at this stage, which in his opinion would just be a 'symbolic' move."
"The possibility of implementing new tools is low, as OTM is still in place, and in fact, has not been used yet. Acknowledge the area damage with dignity is the most the ECB can do this month" Valeria notes.
From a technical perspective, Chris Capre, founder at 2nd Skies Forex still looks for a sell setup towards the daily 20 ema, "currently clocking in at $1.2921, and possibly to add some more shorts around $1.2966 to rejoin the downtrend" he says. Downside targets are set at $1.2750 and $1.2675, with a close above $1.3050 required to erase the bearish bias, he adds.
Valeria says that the pair remains bearish in the long ride, "and recoveries are seen as selling opportunities, as high as $1.2950 this Thursday, with a break below $1.2790 anticipating a return of the bears with $1.2720 then at sight" she adds.