10.09.202011:15 Forex Analysis & Reviews: EUR/USD: Euro to trade depending on the outcome of the ECB meeting due today.

Euro is trading upwards in the market today, as hints of a policy change are circulating ahead of the ECB meeting. However, some believe that it is still too early to amend the soft monetary policy, and that it is better to more carefully analyze the fundamental and economic indicators received in the 3rd quarter.

EUR / USD actually started rising yesterday afternoon, after rumors emerged that a lot of ECB officials are confident on the economic recovery. It suggests that the bank will revise its forecasts into a positive direction, which, of course, will lead to increased demand for the European currency.

However, as mentioned above, there are some who believe that it is too early for the ECB to change its monetary policy. The argument in this direction is a more cautious approach to new measures, that is, before making new changes, for example, increasing the volume and duration of the bond purchase program, the ECB needs to conduct a fairly in-depth assessment of the impact of providing additional liquidity on the markets, as well as the need to expand lending channels. But since the ECB is afraid of raising the euro very much in the market, it is unlikely that will increase the PEPP program any time now.

Instead, what it would touch on is inflation, targeting a new level in particular. Chairman Christine Lagarde may follow the steps of the US Federal Reserve System, especially since it is unlikely that the ECB will manage to bring inflation at its target level in the medium and longer term, as rates have been at negative and zero levels for quite a long time.

So, for the technical picture of the EUR/USD pair, a lot depends on the decisions of the European Central Bank. To implement a bullish scenario, a breakout and consolidation above 1.1865 is required, as such will return the quote back to 1.1910 and 1.1990. However, if the ECB does not announce any changes on the monetary policy, as well as give negative revisions on forecasts, the euro will continue to fall, and the bears will have the opportunity to bring the quote below 1.1790, which will quickly push EUR/USD to 1.1755 and 1.1710.