The prospect of the Euro is prone to uncertainty regarding the announcement of the ECB's meeting tomorrow, and the threat of import duties from the United States. The Euro has skyrocketed quite high yesterday, and climbed back to the level of High 1.1272 against the US Dollar at the beginning of today's European session (9 / April). Even so, the strengthening of EUR / USD was allegedly only because of its oversold position. The prospect of the Euro going forward is still prone to uncertainty about the direction of the policy that will be announced after the ECB meeting tomorrow, and the threat of increasing import duties from the United States.

The ECB Still Tens to Loosen Monetary Policy

Apart from the strengthening of the Euro since the beginning of this week, the economic conditions of the European Union and Eurozone region are still quite weak. The momentum of lost growth has not yet recovered, while the risk of Britain's exit from the European Union (Brexit) continues to overshadow. The Purchasing Managers' Index (PMI) data in the past few months also indicated a deteriorating manufacturing business climate. Against this background, analysts have difficulty finding a strong fundamental basis for the Euro rally.

Kathy Lien of BK Asset Management in a note earlier this morning said that the only reason why the Euro has risen today is because it has been very oversold; the Euro tried to break 1.12 three times, but failed. He continued that In the previous ECB meeting, Mario Draghi caused the currency to fall from 1.13 to 1.1176 when he talked about the need for accommodative policies to cope with the risk of slowing down due to global factors and the threat of protectionism. Nothing has changed since then. And for this reason, they believe that the Euro rallies to 1.13, so it will be a good position to open positions. 

US Plans to Increase Import Rates On EU Products

Meanwhile, horrendous news was released from different parts of the world. US Trade Representative Robert Lighthizer is reported to have submitted a proposal to impose additional import duties on USD 11 Billion of products from the European Union. The application of import tariffs was mentioned triggered by US dissatisfaction with the steps of the European Union to provide subsidies for Airbus aircraft manufacturers. The adoption of import tariffs by the US will include hard and soft commodities, ranging from wine and cheese to helicopters and industrial parts. For the European Union, the realization of the plan could worsen the situation in the midst of declining orders for German manufacturers in recent months.

ECB Minutes Keep Dovish Outlook Steady, Euro Weakens

Minutes of the European Central Bank (ECB) meeting released Thursday highlighted the adverse effects of low interest rates on banks and delayed Rate Hike. In its monetary policy meeting last month, the ECB slammed its steering policy from cutting bond purchases, to re-launch a stimulus in the form of LTRO. Plans for an increase in interest rates were postponed until around 2020 due to drastic economic growth. However, the delay made the central bank worry banks as lenders would transmit this policy to the real economy.

The concern voiced to date is that the impact of continuous low interest rates can reduce interest margins and profitability of banks, which will have a negative impact on the function of banks as intermediaries and financial stability in the long run. In addition, the ECB also pays attention to China's economic development. According to them, the adverse effects of the slowdown in the economy of the Bamboo Curtain country will not just fade in a matter of months.