The ECB is set to announce its decision on monetary policy later today at 1245 GMT, followed by Draghi’s presser at 1330 GMT
According to strategists at Societe Generale SA, the ECB should confirm in this meeting a gradual shift in the policy outlook and also loosening forward guidance slightly.
And in their view, that would make the euro an attractive long against the dollar provided tomorrow’s US jobs report turn out softer than expected as well.
«If we get a slight language tweak (by the ECB) and a drop in average hourly wage growth in the US, we’ll be above $1.25 by the weekend», argues Kit Juckes — a strategist at the firm — when asked about the reaction in EUR/USD.
Most economists are not expecting any changes to language or guidance by the ECB this meeting, and they have good reasons for that as highlighted here. Risk remains skewed to the upside — that is if the ECB decides to surprise the market with a change in language.
Meanwhile, US average hourly earnings is expected to come in at +2.8% y/y tomorrow — a little lower than the +2.9% y/y figure from last month here.