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Absent Fresh Drivers, EUR at Risk of Dovish ECB

EUR
  • The single currency trades moderately higher early Monday, with EUR/USD narrowing the gap with Friday's high and next key resistance at 1.0588.
  • Few new drivers for the EUR so far this morning, although some optionality could be in play as expiries at $1.0550-51(E639mln) and $1.0610-20(E993mln) are within view.
  • Focus understandably rests on Thursday's ECB decision, with markets split between seeing a 50bps and 75bps rate rise. A 50bps rate rise is fully priced, but the implied probability of a 75bps step has moderated considerably in recent weeks (implied pricing sits at ~55bps at pixel time).
  • On the technical side, markets monitor a possible bearish daily candle pattern from Dec 5th - a shooting star - which could come into play if Lagarde proves dovish, leaving nearby support of 1.0387 (20-day EMA) at risk.
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com
MNI London Bureau | +44 203-865-3809 | edward.hardy@marketnews.com

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