As soon, as the markets calm down after the Italian referendum held last Sunday, market participants will focus on the ECB meeting on Thursday. It is expected that the Central Bank will announce continuation of the bond purchase program, which is due to complete in March 2017. Interest rate decision of the ECB will be published at 15:45 (GMT+3). Press conference of the ECB, and a speech of the head of the ECB, Mario Draghi will start at 16:30. Volatility in all financial markets will increase. Sometimes interest rate decisions of the ECB and press conferences caused the rise the Euro by 3-5% in the short time.

The main interest rate (refinancing rate for the commercial banks) is at a level of -0.4%. The ECB has lowered the rate from $4.25% in 2008 to the record low current level.

The ECB will continue QE program in Eurozone, monthly buying European assets for the amount of 80 billion euro (88 billion USD).

These measures have led to the desired improvement of macro-economic statistics and the increase in inflation; therefore the ECB may announce changes to the QE program. National economies of the European countries have to be improved.

After joining Eurozone in 1999, Italian gross domestic product has not grown, while public debt has increased to 133% of the annual GDP reaching second place in Europe after Greece.

Today, political crisis in Italy caused the decline in the pair EUR/USD to the 20-month low. Despite the current rise in the pair, the recovery is questionable, especially due to expectations of the further expansion of the QE program in the Eurozone.

Decisions of the ECB will become known on Thursday.EUR/USD: Euro is under pressure.  Fundamental analysis for 05/12/2016




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