07.09.202111:35 Forex Analysis & Reviews: Market participants await ECB meeting

Ahead of the meeting of the European regulator, the EUR seeks to benefit from the US dollar's fluctuations at least for a short time. The greenback sank again, which allowed the euro to gain in value.

The single European currency is rising ahead of the ECB meeting scheduled for September 9. The euro is gaining upside momentum, thereby trying to exert pressure on the dollar. On Tuesday, in early trade, the EUR/USD pair was drifting around 1.1870, remaining at the previously gained levels.

This week, market participants have shifted their focus from the Fed to the ECB. In the near future, the European regulator is set to revise its GDP forecast for a number of eurozone member states. Statistics on inflation in the euro area countries, which accelerated to a 10-year high of 3%, are of great importance to those who support the regulator's monetary policy tightening. At the same time, the August employment growth rates recorded in the region turned out to be one of the highest in the last 20 years. As for IHS Markit's Purchasing Managers' Index, economic activity in the euro area expanded at a fairly rapid pace last month compared to a 15-year high recorded in July 2021.

In addition, the euro is being supported by positive expectations regarding the upcoming macroeconomic data on GDP from 19 European countries. According to experts, the indicator will increase by 13.6% on an annualized basis and by 2% on a quarterly basis. Besides, Germany's industrial production is anticipated to rise by 0.9% month-on-month. The euro's growth is also being fueled by increased yields on Germany's 10-year bond. Analysts believe that European government bond yields are higher compared to US ones. This could act as a positive factor for the euro's further dynamics. Moreover, if the ECB decides on a cut in its stimulus, the euro will have every chance of extending gains. At the same time, the EUR/USD pair is expected to continue trading within a range, but with the prospect of exceeding the 1.2000 mark. The upper border of this channel is 1.1900.

Against this background, the greenback is drifting at relatively lower levels. Earlier, the US dollar moved close to two-week lows, but then it managed to pare some losses. The greenback came under pressure from weak statistics on US nonfarm payrolls and the Fed's indecision about the issue of phasing out stimulus measures. However, the ECB is also in no hurry to resolve this issue. As a result, the market situation is uncertain, with investors hoping to receive any clues about the regulators' further monetary policy.