EUR/USD has ticked lower in the Monday session. Currently, the pair is trading at 1.1597, down 0.10 on the day. In economic news, it’s a quiet start to the week, with no major releases. The highlight of the day is the opening of the ECB Forum, which kicks off with a speech from ECB President Mario Draghi. On Tuesday, Draghi will participate in a panel discussion. Over in the US, the focus will be on construction numbers, with the release of Building Permits and Housing Starts.
All eyes are on the ECB Forum, where central bankers will converge to rub shoulders and discuss policy. In addition to host Mario Draghi, we’ll also hear from Fed Chair Jerome Powell and Bank of Japan Governor Haruhiko Kuroda. At last year’s meeting, the euro posted strong gains after hawkish remarks from Draghi, so traders will be listening carefully in case Draghi again shakes up the currency markets. Draghi will likely make mention of last week’s ECB meeting, in which he spoke of possible headwinds for the eurozone economy.
The euro has steadied, after posting sharp losses late last week. EUR/USD slipped 1.9% on Thursday, as investors gave a thumbs-down to a dovish rate statement from the ECB and remarks from ECB President Draghi. The ECB pledged to taper its bond-purchase program to EUR 15 billion/mth, in October, down from the current pace of EUR 30 billion/mth. The program will wind up at the end of the year. However, investors detected a ‘dovish flavor’ to the announcement, as the ECB added that interest rates would remain steady “at least through the summer of 2019”, giving policymakers plenty of wiggle-room to delay any rate hikes. The markets were anticipating a rate hike shortly after the end of the bond-purchase program, so this announcement was a disappointment. Draghi sounded dovish in his press conference, saying that the eurozone economy was facing “increasing uncertainty”. Draghi was likely referring to the G-7 meeting which ended in disarray as well as the election of a euro-sceptic government in Italy. The ECB also lowered its growth forecast for the eurozone to 2.1%, down from 2.4% earlier this year.
