ECB Post-Meeting Press Conference
ECB President Mario Draghi is set to hold the post-meeting press conference at 8.30 am ET, when he is expected to drop hints regarding the future course of action against deflationary risks.
"While Draghi will no doubt pay lip service again to his policy artillery, he may choose to keep the powder dry for now," Capital Economics Chief European Economist Jonathan Loynes said. "But the pressure for the ECB to act again seems likely to build quickly."
The central bank was widely expected to maintain status quo this month after Draghi told the German weekly Der Spiegel last week that there was no need for immediate action. He also suggested that low inflation remained policymakers' biggest worry.
"The determination to fight any deflationary tendencies has never been higher than currently," ING Bank Senior Economist Carsten Brzeski said.
"As a strong exchange rate looks as the most imminent threat, we still think that a negative deposit rate would be the ECB's first line of defense if and when deflationary risks increase further."
Recent data indicate the sluggish pace of economic recovery amid deflationary risks and high unemployment. Further, credit growth and liquidity conditions remain weak.
Economic growth moderated in the third quarter to 0.1 percent from 0.3 percent in the three months to June, when the euro area economy exited its longest ever recession.
The recovery likely gained some traction in the fourth quarter of the year, economists say, citing recent data.
Inflation slowed unexpectedly in December to 0.8 percent from 0.9 percent in the previous month. The figure has held below the ECB's target of 'below, but close to 2 percent' for eleven months.
Figures released yesterday showed that retail sales grew stronger-than-expected in November, suggesting that consumer spending may have contributed positively to GDP in the fourth quarter.
However, unemployment remains unacceptably high. The figure has held steady at 12.1 percent for eight consecutive months.
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Draghi: ECB Continues To See Prolonged Period Of Low Inflation
European Central Bank President Mario Draghi reiterated on Thursday that the 18-nation economy is set to experience a protracted period of low inflation and asserted that the bank will maintain easy policy for as long as needed. "We may experience a prolonged period of low inflation, to be followed by a gradual upward movement towards inflation rates below, but close to, 2 percent later on,"
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2 Attachment(s)
What’s Wrong With EUR/USD?
Attachment 23071
"No matter what the economic data is, the EURUSD is having a hard time falling. Actually, it is being bought on each and every dip and people wonder if it isn’t a wise decision to actually buy the pair and hold the position instead of shorting it. The EURUSD outlook looks bearish, though."
Attachment 23072
"EURUSD Bearish on Bigger Time Frames. The reason why the EURUSD is not falling (yet!) is not that the pair is bullish or something, but because the pattern that broke lower is on a big time frame: the daily chart."
the source
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Euro Forecast: EUR/USD Outlook
Attachment 39468
The long-term outlook for the Euro has been boosted significantly by a Franco-German proposal for a €500 billion coronavirus Recovery Fund, even though an agreement is not yet close.
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1 Attachment(s)
EUR/USD: bearish breakdown; 1.16 is the nearest target
Attachment 40859
A steep fall in EUR/USD is on the cards if strong support at 1.16 breaks after last week’s strong hint by the ECB that it’s planning still more stimulus for the Eurozone economy in December.
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