The EUR/USD is trading at $1.3787, off slightly on the day, after the level of growth in the eurozone was revised down from 0.3% to 0.2% in the final quarter of 2013. The levels of growth and inflation will surely be mentioned at the European Central Bank’s press conference tomorrow. Interest rates in the eurozone are at an all-time low of 0.25%, and the consensus for tomorrow’s interest rate decision is to keep them unchanged. Mario Draghi may hint at what the ECB’s plans are for the next few months.
The ECB has backed itself into a corner as interest rates are so low there is less room for them to manoeuvre. Mr Draghi has previously stated he sees no signs of deflation, but I suspect he does not want to introduce negative interest rates on deposits until the situation is dire.
The 50-day moving average of $1.3752 is providing support. If the US ADP employment report at 1.30pm (London time) misses expectations of 192,000 new jobs created, we could see the euro back above the $1.38 mark.