After the two difficult meetings of the European Central Bank (ECB) last week, the ECB will meet next Thursday. However, the bank is expected to continue its easing trend after allowing inflation to rise at its strategy meeting two weeks ago to keep the EUR lower.
ECB Director Christine Lagarde is expected to provide details on an upcoming policy shift in the Pandemic Emergency Procurement Program (PEPP), which she spoke about earlier this month. It currently stands at 1.85 trillion euros and should last at least until March 2022.
Lagarde has already prepared financial markets, saying that they must prepare for a new stimulus orientation “given the persistence we have to demonstrate to fulfill our commitment”.
The eurozone central bank is following an increasingly solitary political path to maintain emergency environments, while its counterparts around the world debate how and when to start reducing stimulus.
With the resurgence of COVID cases again in Europe, it is likely that the ECB will again extend the PEPP. However, I don’t expect the euro to move significantly against its main trading partners such as the British pound and the US dollar, as both are peaceful, notes Kim Chua, senior analyst at PrimeXBT.
However, the EUR could trade lower against the Dollar, towards $1.17 this week and later to $1.16 in the future.
About Kim Chua, Market Analyst at PrimeXBT:
Kim Chua is an institutional trading specialist with a successful track record that spans major banks including Deutsche Bank, China Merchants Bank and others.
Over time, Chua launched a hedge fund that consistently delivered triple-digit returns for seven years.
Chua is also an educator at heart who developed her own trading curriculum to pass her knowledge on to a new generation of analysts. Kim Chua closely follows the traditional and cryptocurrency markets and is eager to find future investment and trading opportunities as the two very different asset classes begin to converge.