EUR/USD ahead of the ECB
EUR/USD is trying to hold above $1.3505/00. The number of unemployed in Spain increased more than expected (by 25.6K vs. 12.3K). The focus today is on the ECB’s meeting and press conference (11:45 and 12:30 GMT).
The ECB is expected to keep the main lending rate unchanged at the all-time low of 0.5% and the deposit rate at 0%. Analysts at Capital Economics think that the central bank may refrain from cutting interest rates again due to the distortions such a move could create within the banking system.
Last week the central bank’s President Mario Draghi said that the ECB is willing to consider more long-term bank loans in order to improve liquidity in the financial system and make banks more likely to lend to businesses and households. As far as we can judge from December 2011 and February 2012, LTRO is a EUR-negative factor.
Resistance is at $1.3545, $1.3563/70, $1.3587, $1.3600. Support lies at $1.3500, $1.3470 and $1.3450.
Chart. H4 EUR/USD