EUR/USD: ECB policy meeting in focus – MUFG

💡 DMK Insight

The EUR/USD’s drop below 1.1800 signals potential volatility ahead of the ECB meeting. With last week’s high at 1.2081, this decline could indicate a shift in sentiment as traders brace for possible policy changes. The ECB’s stance on interest rates and inflation will be crucial; if they signal a more dovish approach, we might see further downside pressure on the Euro. Watch for support around 1.1750, which could be a critical level to monitor. If broken, it might trigger a cascade of selling, affecting not just the Euro but also correlated assets like European equities. On the flip side, if the ECB surprises with a hawkish tone, we could see a rapid reversal back towards 1.2000. Keep an eye on market reactions post-meeting, as they could provide clues on future trends. The immediate focus should be on the ECB’s communication and how it aligns with current economic indicators, especially inflation data.