The euro has trimmed almost all last-week gains in the first half of the week. The euro-to-US dollar exchange rate still can be seen at the 1.15-1.13 handle. Moreover, the rate is testing the 1.14 handle now. The short-term outlook is bearish, with no hikes or slumps being expected.
The European Central Bank Chief, Mario Draghi made quite careful and more bearish message yesterday. At the same time, the market was hardly surprised by such tone, especially given the signs of economic upturn slowdown in the euro area. Nevertheless, the euro felt some pressure anyway. According to the report released this Tuesday, the German economy showed the worst growth over the past five years and did not face a technical recession by a miracle. In this situation, it is clear that there is no need for the interest rate increase to be made by ECB. It makes sense to maintain economic stimulus taking into account softer inflation pressure in the euro-area on the recent oil price collapse.
As a result, the situation is hardly positive for the euro ahead of the ECB meeting. Only pigeon signals from the US Federal Reserve can bring some relief to the euro. In particular, the US Central Bank is about to take a break in the rate increasing in 2019.
After the decline, the euro-to-US dollar rate may break out of the range this week, so the extent of its movement may depend on how soft the ECB's statement will be. Market participants will also study the latest economic reports from Europe and the USA looking for new signs of upturn slowdown.