L'euro est tombé brièvement jeudi après-midi sous le seuil de 1,30 dollar, au plus bas depuis plus d'un an, après les propos du président de la Banque centrale européenne Mario Draghi annonçant que la BCE allait procéder à des rachats d'actifs. /Photo d'archives/REUTERS/Kacper Pempel

The European Central Bank (ECB) is set to release its monetary policy decision on Thursday, May 5, at 12:15 GMT, with the post-meeting press conference to follow at 12:45 GMT. Most market participants expect the ECB to raise its borrowing rates for the seventh consecutive meeting, but opinions are divided on the size of the increase. 

The consensus is that the ECB will slow the pace of rate hikes and announce a smaller 25-bps increase instead of the 50-bps hike seen in March, creating more uncertainty for the July meeting.

Investors will pay close attention to the ECB President’s comments and accompanying monetary policy statement for insights into the future rate-hike path. The outcome of the ECB’s monetary policy decision could significantly impact the EUR/USD pair. 

If the ECB raises rates by 25 bps without forward guidance or a dovish shift, it could weigh on the Euro and lead to some significant downside for the major.

On the other hand, a hawkish 50 bps lift-off could fuel speculation for an earlier ECB rate cut, which could attract fresh sellers around the shared currency, warranting caution for bullish traders. 

Eren Sengezer, European Session Lead Analyst at FXStreet, provides technical levels to trade the major. EUR/USD’s initial resistance level is at 1.1100, while the support levels are 1.1050, 1.1025, and 1.1000.

In summary, the ECB’s monetary policy decision will have significant implications for the EUR/USD pair. Investors should keep a close eye on the central bank’s statements and exercise caution when making trading decisions.


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