It's ECB rate decision day, and the euro is trading flat against the dollar, just below the 1.08 mark. Despite this, the single currency has gained around 4% against the greenback this week, reflecting investor optimism over Europe's plans to boost defence spending through relaxed budget rules. Against this backdrop, and with trade war risks clouding the outlook, today's ECB meeting will be closely watched. A 25bp rate cut is fully priced in, but attention will focus on ECB president Christine Lagarde's forward guidance. Markets are currently expecting at least two further quarter-point cuts by year-end. However, a hawkish tone from the ECB in response to fiscal stimulus plans could shift expectations and support further gains for the euro.
Ricardo Evangelista – Senior Analyst, ActivTrades
Source: ActivTrader
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