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The EUR/USD currency pair is dancing around the $1.36 mark as dealers play the wait-and-see game ahead of the interest rate decision at 12.45pm. The market was caught off guard last month when the ECB cut interest rates from 0.5% to the new historic low of 0.25%. The consensus today is for rates to be kept unchanged.
Investors are even more interested in what Mario Draghi has to say in the press conference at 1.30pm, as some economists feel that the ECB is not doing enough to assist the eurozone. The inflation rate is in the region is 0.9%, well below the ECB’s target of 2%; this is an indication of poor consumer appetite. The focus is now on France and Italy as the countries revealed a slide in their services sector. Both nations are considered to be core European nations – Mr Draghi clearly no longer has just the periphery to worry about.
At 1.30pm, the US will announce its jobless claim report. Considering we saw a strong ADP figure yesterday it is likely the number will be better-than-expected.
If the euro drops to the recent low of $1.3525 it could head towards the $1.34 mark; on the other hand if the currency clears the recent high of $1.3620 the next target could be $1.38.
(All times are London times.)