EUR/USD Vulnerable To Further Losses On ECB QE Adjustment

- European Central Bank (ECB) to Retain Zero-Interest Rate Policy (ZIRP).

- Will the Governing Council Adjust the Non-Standard Measures?

Trading the News: European Central Bank (ECB) Interest Rate Decision

Even though the European Central Bank (ECB) is widely anticipated to preserve the zero-interest rate policy (ZIRP) in July, a series of adjustments to the non-standard measures may drag on the Euro and spark a near-term decline in EUR/USD should the central bank continue to push monetary policy into unchartered territory.

What’s Expected:

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Why Is This Event Important: With the U.K.’s imminent exit from the European Union (EU) clouding the economic outlook for the monetary union, ECB President Mario Draghi may take additional steps to insulate the euro-area, and the Governing Council may extend the duration as well as the scope of its quantitative easing (QE) program in an effort to encourage a stronger recovery.

Expectations: Bearish Argument/Scenario

The weakening outlook for global growth accompanied by the spillover effects from ‘Brexit’ may prompt the ECB to boosts its efficacy of its non-standard measures, and a meaningful adjust to the Public SectorPurchase Program (PSPP) may dampen the appeal of the single-currency as the central bank continues to embark on its easing cycle.

Risk: Bullish Argument/Scenario