Many traders expect the European regulator to drop its so-called “easing bias” and signal the coming “hawkish” shift in the , which could be perceived as the first step towards policy normalization. Such assumptions are based on the minutes from the last meeting that showed the ECB could announce changes to in “early” 2018. Should this happen, EURUSD will get a significant impetus and rise back above the 1.25 threshold.
However, there is a risk for this scenario as the also mentioned in the minutes that the euro exchange rate was a source of uncertainty. Considering the currency remains strong and continues to trade close to its three-year highs, Draghi may opt to be patient and keep the cautious approach, which will be a disappointment for the bulls. But even so, the potential downside pressure on the pair will likely be limited as the greenback remains under a significant pressure.