The European Central Bank will likely maintain rates on hold once again.
ECB President Christine Lagarde could change its cautious tone and hint at an upcoming rate cut.
US CPI was hotter than anticipated in March, triggering risk aversion.
EUR/USD bearish case gains momentum as the pair stands below 1.0800.
The European Central Bank (ECB) will announce its monetary policy decision on Thursday. Market participants anticipate no changes to the current policy, but policymakers continue paving the way towards interest rate cuts in June. The ECB has tightened rates to fight skyrocketing inflation in the pandemic aftermath, lifting the Main Refinancing Operations Rate to 4.50% and the Deposit Facility Rate to 4% from negative levels in little over a year.
Beyond rates, the ECB is using other tools: the Asset Purchase Programme (APP) and the Pandemic Emergency Purchase Programme (PEPP). The first one is being reduced methodically and predictably as the Eurosystem ceases reinvestments from maturing securities. Regarding the PEPP, the central bank planned to reduce the portfolio by an average of €7.5 billion per month beginning in the latter half of 2024 and cease reinvestments under the PEPP by the close of 2024. No changes are expected there either in the April meeting.
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