Several members of the ECB have indicated that the financial institution must intervene within the markets to stay rates low.

The ECB meets on Thursday in the week . As discussed within the Week Ahead, with the recent “unwarranted” rise in yields and inflation expectations, several members of the ECB have indicated that the financial institution must intervene within the markets to stay rates low. Some European countries are still in lockdowns while the vaccine rollout has been slow, as compared thereto of the US and UK. The ECB must manage expectations so as to not let the markets get before themselves. Under the Pandemic Emergency Purchase Program (PEPP), the ECB can purchase up to 1.85 trillion Euros worth of bonds through March 2022. Many expect them to intensify their bond buying under this program. additionally , they'll extend the duration beyond March 2022. an alternative choice the financial institution has is to chop the Deposit Facility Rate below its already ultra-low current level of -0.5%! await revisions lower in both growth and inflation in ECB members’ forecasts.


Last week, Fed Chairman Jerome Powell indicated that the Fed is currently not concerned about the recent rise in yields and inflation expectations. They see this as a symbol of confidence in pandemic recovery. He also said that the Fed is currently more concerned about the low labor participation rate and therefore the 10 million just still lost from the pandemic. On Friday, NFP data for February showed that 379,000 new jobs were created. Most of those jobs were within the lower paying hospitality sector. However, that's where many of the roles were lost. because the economy continues to recover, await more jobs to return back during this sector. additionally , this week, the US will hold 3-year, 10-year and 30-year auctions. Given the week demand for the recent 7-year auction, these auctions are going to be closely monitored. Weak demand may send yields and therefore the US dollar higher. additionally , the $1.9 trillion stimulus package is probably going to be passed in the week .


EUR/USD broke lower from and ascending wedge in early January 2021. However, for many of the year, the pair has been trading during a range between 1.2000 and 1.2200. EUR/USD posted a false breakout of an inverse head and will formation on February 25th and formed a meteor candlestick. this is often a reversal candle and a sign that price may move lower. Indeed, subsequent day the was an extended red candle, followed by more long red candles. On Friday, price broke below the year-to-date lows near 1.1950 and horizontal support dating back to September 2020. Price is obvious to fall to November 4th lows near 1.1602, however it must fall flat the 161.8% Fibonacci extension form the lows of February 5th lows to the highs of February 25th, near 1.1784. Resistance is back at previous support near 1.1920.On a 240-minute timeframe, EUR/USD has reached its target of the AB=CD pattern. The RSI is in oversold conditions, which indicates the pair could also be ready for a reversal. Above the previous mentioned 1.1920 resistance, is horizontal resistance at 1.1990 then the March 3rd highs at 1.2113. 


The US auctions on Tuesday, Wednesday, and Thursday, along side the ECB meeting on Thursday, could cause EUR/USD to be volatile this week!