Be Watchful Ahead of ECB’s Interest Rate Decision, 40+ PIP Volatility Likely; Jan 21, 2021

ECB’s Interest Rate Decision & Monetary Policy Statement

The key event from the Euro zone is the Interest Rate decision scheduled today at 1245 GMT/1815 IST followed by ECB Press Conference at 1330 GMT/1900 IST. It’s the primary tool the ECB uses to communicate with investors about monetary policy. It contains the outcome of their decision on interest rates and commentary about the economic conditions that influenced their decision. Most importantly, it discusses the economic outlook and offers clues on the outcome of future decisions

Let’s first look back in December’s ECB meet:

  • The ECB increased asset purchases by $500 billion
  • The ECB extended bond buying till March 2022
  • ECB lowered growth forecast for the year 2021
  • Recently Euro zone faces severe rise of Covid infections and going through locked down

Market Expectations for the day:

  • Interest rate will remain unchanged
  • Any unexpected measure will be surprise from the ECB to fight covid
  • Likely impact of locked down on the economy
  • FX movement are closely watched out by ECB but they are not targeting it
  • ECB may go for additional Asset purchase

Let’s see how Euro has reacted during the previous data release:

Dec 10:

Oct 29:

Technical View:

EUR/USD: The euro appreciates considerably ahead of ECB’s Interest Rate Decision. The pair made intraday high at $1.2147 and low at $1.2101. The pair faces key hurdle at $1.2151 mark. A successfully close above requires for the upside rally. Alternatively, reversal from key resistance will drag the parity down towards key supports too.

Key Resistances: $1.2151, $1.2198, $1.2232, $1.2265

Key Supports: $1.2100, $1.2074, $1.2022, $1.1962

Take a look and do trade wisely!
Good Luck

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