ECB Inflation Outlook On WatchThe February ECB meeting today will play second fiddle to the BOE meeting. However, there is still potential for market action in response to the meeting as traders await the latest outlook and assessment from the bank. No alteration in monetary policy is expected at this point so the main focus will be on the bank’s guidance. In particular, traders will be focusing on the ECB’s inflation outlook. The bank has been steadily moving away from its judgement last year that the inflation spike would prove transitory with the language at each meeting being carefully scrutinized. With this in mind, any perceived uptick in concern around inflation risks will likely spill over into a higher EUR as traders begin to bring rate hike projections forward. Alternatively, if language and outlook are broadly unchanged, this will likely see a muted response from EUR.Where to Trade the February ECB Meeting?EURNOKEURNOK is currently sitting on a ledge of support at the 9.9145 level, within the broader bear channel which has framed the decline from 2021 highs. While within the channel, the focus is on a break of the 9.9145 level and a continuation lower towards 9.6689. On the other hand, should we see any reversal in current market conditions, a break of the channel top and the 10.2376 level offers breakout opportunities towards the 10.4670 level next.
Source: Tickmill
