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Euro Exchange Rate Today: Stay on your toes - ECB risk lies ahead, EUR/USD seen remaining in 1.35-1.3580 band

A look at the currency markets in mid-morning in London shows:

  • The euro dollar foreign exchange rate is 0.04 pct in the blue at 1.3532.
  • The euro pound sterling foreign exchange rate is 0.11 pct higher at 1.6214.
  • The euro Australian dollar foreign exchange rate is 0.6 pct higher at 1.4644.

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The big risk-event ahead: ECB and Draghi press conference

Any surprises from the ECB and Draghi press conference could send the Euro marching in either direction.
KBC Markets advise clients that they expect the ECB to talk dovish in an attempt to prevent more euro strength.

"Even so, ‘hard action’ (a rate cut, a new LTRO....) rather than only talking/policy guidance is needed to tip the balance of EUR/USD again to the disadvantage of the euro," says Piet Lammens at KBC Markets.

UniCredit Bank tell clients that they are not expecting anything new:

"Today, we expect rates to be kept on hold and no new unconventional measures. ECB President Draghi will continue to sound dovish, and the bank's forward guidance will most likely be confirmed in its current version."

Outlook for the euro today

Concerning the euro vs pound exchange rate, Lammens says he continues to back sterling gains:

"We don’t see a trend reversal of sterling unless the UK eco data would turn for the worse (not our basis scenario), but still prefer a sell EUR/GBP in case of a correct."

Regarding the headline euro dollar exchange rate UniCredit say:

"EUR-USD retreated from yesterday’s peaks, but it is likely to be exposed to new swings today, mostly in the 1.35-1.3580 band, depending on the evolution of the political picture in Italy, while ECB President Draghi is expected to reaffirm the bank's recent dovish stance."

Emmanuel Ng at OCBC Bank says:

"In spite of largely supported manufacturing PMIs out of the EZ, the EUR-USD peaked near 1.3580 and retraced lower to end largely unchanged by the end of the global session.

"The EUR-USD may remain in a supported posture in the near term pending further US fiscal developments (and the ECB today) with support seen towards 1.3450 while 1.3570 may cap for now."

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