Good morning traders.
Today is all about the ECB meeting slated for 12.45 GMT with the follow up press conference at 13.30.
The key items to look out for are:
- Interest rates – no change is expected in the main refinancing rate, currently 0%
- QE – expected to be terminated
- Growth and inflation – updates in projections
From an overall perspective traders will be on the look out for any dovish or hawkish language in the projections and press conference to suggest any change in what is already known.
Whether we get any slightly more hawkish rhetoric is not at all clear as the Eurozone faces a number of threats at the moment.
- Eurozone GDP growth has dropped from 2.8% yoy in Q4 2017 to 1.6% yoy in Q3 2018.
- Inflation has remained largely unmoved even with very accommodative policy
- The Italian budget deficit dispute remains unresolved
- Populist revolts in France
- Germany coming to terms with Angela Merkel stepping down from power in the near future
- Risks associated with Brexit.
In light of the above it would be quite a feat for the ECB to move much in terms of known policy to a more aggressive hawkish stance. The probability is that it may be more dovish. We need to be ready in either case as a strong indication in either direction could significantly change the landscape.
The H4 Chart
No change in the Daily chart. We are resolutely in the middle of the range that has kept the pair bounded for some time, 1.1450 and 1.13.
More interestingly from a pattern perspective is the H4 chart. We can see that we are compressing within a triangle. At some point we will break higher or lower. Maybe the ECB today will be the catalyst.
The Hourly Chart
S & R levels noted. However, as we have the ECB data out today, I would be extra vigilant. Any key changes in language or projections as noted above could result in any levels being ripped through on either side.
Have a good day:).