The European Central Bank looks all but certain on Thursday to firm up plans to end bond purchases this year and raise interest rates next autumn, arguing that the eurozone economy has enough momentum to expand unsupported after years of stimulus.
With inflation rebounding and growth leveling off at a relatively healthy pace, the ECB has been gently removing stimulus for months in the belief that a range of risks from global protectionism to Brexit were not enough to derail a growth run that is now into its sixth year.
Indeed, ECB President Mario Draghi is likely to emphasize that expansion is solid enough to absorb spare capacity and thus generate inflation, even if it could still take years to push consumer price growth back to the bank’s near 2 percent target.
The ECB has bought more than 2.5 trillion euros of debt in the past four years, depressing borrowing costs and driving up economic growth following a double-dip recession that nearly tore the 19-member currency bloc apart.
"Quantitative easing needs to end at the end of this year not least for political reasons. Consequently, for the message to be consistent, the outlook must remain ok," economists at Bank of America - Merrill Lynch wrote in a note.
The ECB will announce its policy decision at 1145 GMT, followed by Draghi’s news conference at 1230 GMT, during which quarterly economic projections will also be unveiled.
Euro zone government bond yields were mostly little changed early on Thursday, with the market largely sidelined ahead of the ECB’s decision. The Bank of England and the central bank of Turkey were also due to give policy updates.
Price trading above the 50-SMA and 20-EMA level forming support at 1.16087 and 1.15991. Below here will be the bear territory.
A close above 1.116300 will be a positive sign that EURUSD will test the trendline resistance of 1.17111.