The April ECB meeting yesterday passed as expected without any fireworks or notable changes to the bank’s views. With the June meeting pegged as the most likely date for any adjustment or announcement, traders had been expecting the bank to maintain its policy at current levels which is precisely the decision the bank took.

Easing To Remain in Place

During the post-decision press conference, the ECB chief told reporters “Preserving favorable financing conditions over the pandemic period remains essential to reduce uncertainty and bolster confidence, thereby underpinning economic activity and safeguarding medium-term price stability.”

Faster Pace of Bond Purchases to Continue

At the last meeting, the ECB announced that it would be ramping up the pace of bond purchases in an effort to combat rising bond yields. This message was reaffirmed this time around with Lagarde explaining: “The Governing Council expects purchases under the PEPP over the current quarter to continue to be conducted at a significantly higher pace than during the first months of the year.”

In terms of its assessment of the economy, the ECB noted that “Incoming economic data, surveys and high-frequency indicators suggest that economic activity may have contracted again in the first quarter of this year but point to a resumption of growth in the second quarter.” However, the ECB chief was quick to add the caveat that the bank is facing an “overall environment of uncertainty”.

Lagarde Say No discussions Yet on Tapering

Traders were hoping for clues as to when the ECB might begin to unwind the record monetary easing it has in place, with most pegging June as the date. However, EUR sold off as Lagarde told reporters that as yet there had been no discussions on scaling out of easing, citing such conversations as “simply premature.” Looking ahead, Lagarde explained that the bank’s policy approach will depend on how the pandemic and the economy develop, telling reporters “The envelope can be recalibrated if required to maintain favorable financing conditions to help counter the negative pandemic shock to the path of inflation.”

Technical Views

EURCAD

The recovery rally in EURCAD ran into heavy selling pressure on approach to the 15207 level and the test of the bear channel top. Price has since turned back below the 1.5207 and is now approaching the 1.4946 level, a break of which will open the way for a test of the 1.4795 level next

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