There is a growing air of anticipation across financial markets ahead of the European Central Bank rate decision and press conference later in the day.
Although the ECB is broadly expected to keep monetary policy unchanged in April, the main focus and potential action will probably revolve around Draghi’s post-meeting press conference. While Mario Draghi is likely to reiterate the message he delivered during March’s policy meeting, when the ECB dropped its easing bias, this could be presented with dovish touch. With Eurozone economic data disappointing in recent months, inflation still below the golden 2% target and lingering trade tensions weighing on sentiment, doves could steal the show today.
A key question on the mind of many investors is whether the soft economic data during Q1 will result in the ECB delaying the QE exit decision. With speculation rising over the ECB pushing back the taper timeline, it will be interesting to hear Mario Draghi’s thoughts on this topic during his press conference. The Euro remains at risk of extending losses against the Dollar if Draghi strikes a cautious tone.
This is certainly shaping up to be a bearish trading week for the Euro, which has tumbled to levels not seen since the 1 March – below 1.2160. Focusing on the technical picture, the EURUSD is at risk of tumbling lower, if bears are able to maintain control below the 1.2200 level. Previous support around 1.2200 could transform into a dynamic resistance, that invites a decline towards 1.2150 and 1.2090.
Commodity spotlight – WTI Oil
WTI Crude appreciated on Thursday morning, as market expectations over the United States re-imposing sanctions against Iran and a drop in Venezuela’s oil production fuelled fears of supply shortages.
It is becoming increasingly clear that oil bulls remain heavily reliant on geopolitical tensions to sustain the current rally. While further upside could be on the cards in the near term amid OPEC optimism, gains are likely to be capped down the road by soaring production from U.S Shale. Taking a look at the technical picture, WTI Crude continues to fulfil the prerequisites of a bullish trend as there have been consistently higher highs and higher lows. WTI has the potential to challenge $70 if prices are able to keep above $67.50. Alternatively, if bulls become exhausted and fail to defend $67.50, the next level of interest will be at $66.00.