As markets expected, the European Central Bank left its monetary policy unchanged at its January meeting on Thursday. Following the policy meeting, the ECB President Mario Draghi said the Euro zone's economic recovery remained subdued. Moreover, the ECB President stated at the post-meeting press conference that the region's economic growth is unlikely to gain momentum in the upcoming months due to the slow pace of structural reforms. According to Draghi, fiscal policies should also support the Euro zone's economic recovery within the European Commission's system of rules. The headline inflation rate is expected to rise more in the short-term, driven by higher energy prices. In the meantime, the Central bank said that underlying inflationary pressures in the region remained benign. However, the ECB expressed hopes for an increase in core inflation over the medium term. The EUR/USD pair hit its daily low of $1.0607, following Draghi's comments on inflation. The Central bank pointed to an uptick in manufacturing activity and rising confidence indicators. Nevertheless, it signaled it was ready to provide additional monetary stimulus if economic conditions worsen.
Back in December, the Bank cut its monthly asset purchases to 60 billion euros but extended the QE program by six months until at least March 2017.
Upcoming fundamental releases: Trump's speech
The single fundamental event on the economic calendar could come with some volatility in the currency markets as the world will be watching President-Elect Donald Trump's speech and seeking some indications on foreign and domestic policy.
EUR/USD still inside junior channel
Daily Chart: EUR/USD opened green on Friday after the pair was denied access to levels below the 55-day SMA of 1.0608 two days before. The motion still should remain on the bearish side due to the ultimate target lying at the channel bottom boundary, even if today closes green, meaning that risk still lies both above and below and the daily theme could reverse. In case the pair attacks the supply area above at 1.0733, there is decent risk that the junior channel will break, due to the recent stickiness of its upper part.SWFX traders shift to bearish side
SWFX traders have become bearish regarding the pair, as 48% of open positions are short on Friday. In addition, 58% of trader set up orders are to sell the Euro.
Spreads (avg,pip) / Trading volume / Volatility
Average forecast says EUR/USD will trade around 1.0591 in April
Traders, who were questioned on their longer-term views on EUR/USD between December 20 and January 20 expect, on average, the currency pair to trade around 1.0591 by the middle of April. In addition, 43% (-3%) of participants believe the exchange rate will be generally above 1.06 in ninety days and 15% (-1) see it above 1.12. Alongside, 29% (-1%) of those surveyed reckon the pair will trade below 1.02 in three months.