EUR/USD hits a session high of 1.1006
Markets are looking more risk-on as the session progresses with the dollar and yen notably on the back foot as we navigate through the European morning.
As such, EUR/USD has climbed back above the 1.1000 handle with buyers also breaking back above the 100-hour MA (red line) @ 1.0996, thus establishing a more neutral near-term bias in the pair currently.
There are also large expiries rolling off at the figure level today so that may limit spot gains for the time being but overall, I don't see much reason for euro traders to get all too optimistic ahead of the ECB meeting.
There is growing talk of a less dovish stimulus package - which doesn't include QE - to come next week but I reckon that may not necessarily be a good thing for the euro.
On the one hand, less dovish policy may seem like a good thing. But with the plight currently faced by the Eurozone economy (weakening growth conditions and subdued inflation), the lack of significant stimulus measures could mean that markets may see the ECB as not doing enough to promote a recovery.
I reckon that's a view that markets will eventually adopt as economic conditions continue to suffer in spite of the ECB's efforts next week. I would then expect inflation expectations to deteriorate further in the coming months and that will eventually weigh further on the single currency down the road.
