eFXdata reports that Danske Research discusses its expectations for ECB March policy meeting.

"We expect the ECB to stand ready to ease monetary policy via rate cuts should the economic outlook deteriorate sharply in the near future. As such, we see the possibility of a rate cut in Q2, perhaps as early as the 30 April meeting...We expect the new ECB staff projections to lead to lower GDP growth and broadly unchanged inflation projections. However, with the limited amount of data released taking into account the COVID-19 effect, we believe markets will focus on the narrative rather than the projections," Danske notes.

"EUR/USD continues to be inversely related to market sentiment across credit, equities and commodities and, on the rates sides, driven mainly by Fed expectations and the unwinding of short EUR/USD positions. With the ECB likely to underwhelm market expectations, this spells upside risk in the cross, notably for Thursday, if we are right in seeing no rate cut and - depending on the spot level heading into the meeting - there is a likelihood we could see a test of the January 2019 highs (slightly above 1.15)...While failure to deliver has the potential to push EUR/USD higher, we would sell into such a move, as we view the direction of global equities as more crucial," Danske adds.