The EUR/USD is trading at $1.3727, generally flat on the day. Volatility is low in the wake of the political stalemate between Ukraine and Russia, and dealers are looking ahead to the ECB interest rate decision and statement tomorrow. The euro has lost ground over the last few days because of the uncertainty surrounding Ukraine which propelled a flight to the US dollar; as tensions decrease we could see the euro pull back it losses.
At 12.45pm (London time) tomorrow, the ECB will announce its interest rate decision. The consensus is to keep the base rate at 0.25% but the statement at 1.30pm will be the real focus. Last week, the eurozone revealed inflation ticked up in February by 0.1% to 0.8%, dispelling any rumours of any further interest rates – for now at least.
The euro has been trading within a tight range of $1.3708 and $1.3770; if Mario Draghi continues to hold off on a stimulus package for the eurozone, it could push the euro towards the $1.38 level.