Today’s European Central Bank (ECB) meeting contained very little that was new or noteworthy, argue analysts at TD Securities. They point out a stronger anchor to distant inflation forecasts makes a scant difference to a spot instrument. They see some disappointment to those looking for a stronger dovish signal that suggests some potential for a EUR/USD move higher but they warn the move is limited as investors shift their attention to next week’s FOMC meeting.
“The lack of any policy cues for an upcoming meeting could provide the fuel to get us there, but we expect investors will pivot quickly to a focus on next week’s FOMC meeting. In line with this, our ambition for a significant move higher is rather limited. While we see scope for some additional upside potential for EURUSD, we think spot is likely to remain confined to familiar ranges until fresh catalysts emerge.”
“The move has seen spot climb above initial resistance around 1.1825 with 1.1851 as the next obvious objective to the upside. More significant, however, would be a push above last week’s high of 1.1881. We think a weekly close above there could begin to change the market’s perception of the pair’s directional momentum.”
“We are willing to consider this week’s trough around 1.1750 as a potential base for this cycle. We continue to keep a close eye on the end-March low at 1.1704 as major support, however.”