Euro Enjoys Roller Coaster Movement Ahead of ECB’s Interest Rate Decision; 40+ PIP Volatility Likely; April 22, 2021

Euro ECB Main Refinancing Rate Decision

Today the key event for the day will be ECB’s Interest Rate Decision scheduled at 1145 GMT/1715 IST followed by ECB’s Press Conference at 1230 GMT/1800 IST. Short term interest rates are the paramount factor in currency valuation – traders look at most other indicators merely to predict how rates will change in the future. The 6 members of the ECB Executive Board and 15 of the 19 governors of the Euro area central banks vote on where to set the rate, via rotation. The split of votes is not publicly revealed.

In addition, Monetary Policy Statement is 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.

Lastly, ECB’s Press Conference will release and is about an hour long. It has 2 parts – first a prepared statement is read, then the conference is open to press questions. The questions often lead to unscripted answers that create heavy market volatility.

In today’s meet, either ECB may clarify their forward guidance or stands pat till the time Euro Zone controls the third virus wave. Currently in EU, J&J’s vaccines are rolling out and soon EU’s economy will come back on track. If ECB keeps the hawkish tone regarding economy recovery, Euro could jump above $1.2150 otherwise if ECB keeps adding stimulus to economy, Euro might get depreciated to $1.1940 mark.

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

March 11:

Jan 21:

Technical View:

EUR/USD: The euro depreciates sharply ahead of ECB’s Interest Rate Decision and Press Conference. The pair made intraday high at $1.2049 and low at $1.2024. Today triple EMA on a day chart and H1 chart suggests bullish trend for the time being. A consistent close above $1.2050 on H1 chart requires for the upside rally. Alternatively, a sustained close below $1.2006 on H1 will check further supports.

Key Resistances: $1.2050, $1.2090, $1.2128, $1.2152, $1.2180

Key Supports: $1.2006, $1.1980, $1.1942, $1.1920, $1.1876

Take a look and do trade wisely!
Good Luck

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