When is the European Central Bank (ECB) rate decision and how could it affect EUR/USD?

ECB monetary policy decision – Overview

The European Central Bank (ECB) is scheduled to announce its monetary policy decision this Thursday at 12:15 GMT, which will be followed by the post-meeting press conference at 12:45 GMT. The ECB is all but certain to lift interest rates for the third time in as many meetings to bring down inflation. In fact, the Eurozone Harmonised Index of Consumer Prices (HICP) tapped a 40-year high and surged to 9.9% YoY in September. That said, worries about a deeper economic downturn, fueled by the protracted Russia-Ukraine war, might force the ECB to slow the pace of future rate hikes.

Analysts at Deutsche Bank offer a brief preview of the event and write: “We expect another 75 bps hike, followed by 75 bps in December, 50 bps in February and 25 bps in March, reaching a terminal rate of 3%. The press conference as ever will be a focal point and there’ll be lots of attention on technical things surrounding TLTROs and excess reserves.”

How could it affect EUR/USD?

Given that a 75 bps rate hike move is already priced in the markets, the announcement might do little to provide any meaningful impetus to the shared currency. Hence, the accompanying monetary policy statement and ECB President Christine Lagarde's comments will be scrutinized for the near-term policy outlook. This will play a key role in influencing the shared currency and provide some meaningful impetus to the EUR/USD pair.

Eren Sengezer, European Session Lead Analyst at FXStreet, offers a brief technical outlook for the EUR/USD pair: “The Relative Strength Index (RSI) indicator on the four-hour chart stays slightly above 70, suggesting that there is more room on the downside for the pair to correct its overbought conditions.”

Eren also outlined important technical levels to trade the EURUSD pair: “On the downside, 1.0050 (static level, former resistance) aligns as initial support before the all-important 1.0000 level. In case a dovish ECB message triggers a euro selloff, a drop below parity could bring in additional sellers and cause the pair to slide toward 0.9950 (static level, 20-period SMA).”

“Key resistance seems to have formed at 1.0100 (static level, psychological level). If the pair rises above that level and confirms it as support, it could target 1.0175 (static level) and 1.0200 (September high),” Eren adds further.

Key Notes

   •  European Central Bank Preview: Small chance President Christine Lagarde delivers a hawkish message

   •  ECB Meeting Preview: Lagarde set to hit euro with dovish hike, four reasons to expect EUR/USD to tumble

   •  EUR/USD Forecast: Euro could clear 1.0100 on a hawkish ECB surprise

About the ECB interest rate decision

ECB Interest Rate Decision is announced by the European Central Bank. Usually, if the ECB is hawkish about the inflationary outlook of the economy and rises the interest rates it is positive, or bullish, for the EUR. Likewise, if the ECB has a dovish view on the European economy and keeps the ongoing interest rate, or cuts the interest rate it is seen as negative, or bearish.