Rabobank economists expect the ECB to add € 250 billion to its pandemic emergency purchasing program (PEPP) and a 10 basis point drop in the deposit rate which should support the euro.
Read: PEPP expansion to raise EUR / USD – TDS
“The ECB is expected to announce a 250 billion euro addition to the PEPP and a 10 basis point drop in the discount rate. Although a headline about lowering rates may wobble the euro, in today’s environment, investors are more likely to see new policy measures as another reason to spend more money on peripheral assets, which could provide some support for the euro. “
“If European officials can continue and build a more integrated EU, it would probably be seen as a game changer for political risk in the euro area. In turn, this could strengthen the long-term value of the euro. “
Although the bull market may have to continue to function in the short term and the EUR / USD rise continues, we remain skeptical at the moment that we have witnessed a lasting shift in the direction EUR / USD. The December high of 1.1239 may provide some resistance. “