ECB Leaves Monetary Policy Unchanged, Euro Drops on Hawkish Disappointment

EUR/USD Price, Chart, and Analysis

• ECB leaves rates unchanged and warns inflation will remain high over the coming months.
• EUR/USD slides below 1.0900 ahead of ECB press conference.

The European Central Bank (ECB) has left all monetary policy settings untouched, as per market expectations, and has so far given market hawks little to work with. Monthly APP purchases will be E40 billion in April, E30 billion in May and E20 billion in June and the governing council said that data since the last meeting ‘reinforced its expectation that net asset purchases under the APP should be concluded in the third quarter’.

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The Euro has slipped back below 1.0900 post-announcement with the market disappointed that the ECB had not been more hawkish, especially with regards to APP purchases. The last ECB meeting gave the market the impression the central bank would likely be more aggressive when dealing with rampant inflation, although these views were subsequently rolled back. EUR/USD is currently trading at its lowest level of the session around 1.0870 with the double-low just above 1.0800 the next area of support.

EUR/USD Daily Price Chart – April 14, 2022

Retail trader data show71.85% of traders are net-long with the ratio of traders long to short at 2.55 to 1. The number of traders net-long is 8.66% lower than yesterday and 0.18% lower from last week, while the number of traders net-short is 13.42% higher than yesterday and 1.55% lower from last week

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We typically take a contrarian view to crowd sentiment, and the fact traders are net-long suggests EUR/USD prices may continue to fall. Positioning is less net-long than yesterday but more net-long from last week. The combination of current sentiment and recent changes gives us a further mixed EUR/USD trading bias.

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