The highlight of today's FX session will be the European Central Bank (ECB) meeting. Economists at ING are looking for a sub-consensus 50 bps hike which in theory may see EUR/USD edge lower.

ECB to comment more directly on the euro?

“Our base case is that the ECB only hikes 50 bps versus the 75 bps consensus and the 67 bps priced by money markets. In theory, that should be a euro negative and we have a base case of EUR/USD dropping back to 0.9900.”

“It will also be interesting to see how President Christine Lagarde handles any questions on the weak euro. Any comments along the lines of the ECB is 'watching FX closely' could trigger a brief counter-trend rally in EUR/USD. That said, EUR/USD is trading down here for solid macro reasons and we doubt any intra-day rallies last.”

“We would assume that 1.0100 proves the extent of any EUR/USD short squeeze and would favour a move back to 0.9900.”

See – ECB Preview: Forecasts from 12 major banks, even 75 bps is too little to lift the euro