Renewed uncertainty in the euro zone may have put the euro under pressure in recent days, but analysts argue that it’s the European Central Bank (ECB) meeting, rather than the developments in Portugal, that pose a bigger risk to the single currency.
Analysts say expectations that the ECB’s policy statement on Thursday will sound dovish, with President Mario Draghi keeping monetary easing on the table, should lead to further weakness in the euro.
“Today’s ECB policy announcement is a much larger threat to the euro,” BNP Paribas said in a note. “The ECB statement could see an increased emphasis on forward guidance, while also highlighting an implicit contrast between the Fed’s QE (quantitative easing) tapering signal and the ECB’s accommodative stance for the foreseeable future.”
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