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Euro tests $1.10 but ECB doves could be hard to satisfy

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The European Central Bank (ECB) meeting is what matters the most to worldwide traders today. The ECB is expected to take monetary action at todays meeting to give a boost to the depressed Euro zone economy as a result of the rising global trade tensions, slower growth and Brexit uncertainties. The ECB could lower its deposit rate by 10 basis points to -0.50 %, announce a new round of asset purchases up to 50 billion euros per month over at least a year and put in place a system aiming to exempt a third of banks excess reserves from the deposit rate. It is obvious that the market has highly dovish expectations from Mario Draghi. But high expectations also mean easy disappointment. Hence the euros mood will mostly depend on how investors react to a more or less dovish decision at todays ECB meeting.

The euro bears have begun flirting with the 1.10 mark against the US dollar on Wednesdays session. A sufficiently dovish ECB decision could send the EURUSD sustainably below this level. But if the ECB fails to meet investors expectations, buyers will be happy to step in at two-year lows. Put options trail below 1.1040 at todays expiry.

Read the full LCG article

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About the author

Ipek Ozkardeskaya is a senior analyst at MBAex with a solid experience in the financial industry. She has strong technical background in economics and quantitative finance. Previously, she worked as a senior market analyst in London Capital Group, FX strategist in Swissquote Bank and as a client sales executive at HSBC Private Bank in Geneva. She also developed quantitative models in automatic trading as part of BCV’s Structured Products team. Ipek has a Master’s degree in Financial Engineering & Risk Management and a Bachelor degree in Economics from University of Lausanne.
Contributing  author since 11/09/2017

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