Euro welcomes ECB QE exit talks

Euro welcomes ECB QE exit talks


EURUSD             has appreciated marginally yesterday, with the bullish bias remains intact on Wednesday. The latest rise in the single currency could be attributed to some relief in Italy             as the new Prime Minister Conte highlighted that his country has no plans to leave the euro             zone.

The additional upside pressure came amid ECB QE exit talk. It was reported that the central bank could discuss the end of its quantitative easing program during the next policy meeting next week. Some hawkish comments by ECB members added to bullishness today. In particular, Hansson said higher rates are possible before mid-2019, while Bundesbank head Jens Weidmann expressed hope that inflation to gradually return to levels compatible with target.

Against this backdrop, EURUSD             jumped to May 23 highs around the 1.1760 area and is attempting to derail the 20-DMA. ECB hopes may drive the pair further north in the short term, but considering the dismal economic numbers from euro             area this year, there are no significant arguments for a more aggressive approach to ECB policy normalization. As such, rising expectations on this front may play against the euro             bulls eventually as the central bank will hardly sent a clear hawkish signal to the markets during the upcoming meeting.