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Thursday is key for the Euro

The euro held steady near a 3-week high today while bets on market volatility stayed close to their highest since June’s Brexit vote ahead of this week’s European Central Bank meeting due to give new guidance on its quantitative easing programme.

Other major currency pairs were all trading in a tight range after a rollercoaster ride following Sunday’s Italian constitutional referendum that saw the euro dip to a 21-month low before bouncing more than 1.5 percent.

Italian Prime Minister Matteo Renzi’s referendum defeat and subsequent confirmation that he would resign was widely expected and, after an initial drop, led to widespread euro buying by players seeking to cash in the gains they had made in the fall.

ECB chief Mario Draghi’s news conference on Thursday is among the most hotly awaited this year, given expectations that the bank will lay out its plans for quantitative easing after next March.

At least a six-month extension of the programme is now expected but many bank and fund analysts speculate that the bank might announce some sort of reduction or tapering of the monthly bond-buying amounts as part of that move.

Any such change in the direction of the ECB’s policymaking would generally be regarded as a euro positive after almost two years of money-printing which have weakened the currency.

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